Question : 206.A new machine costing $1,800,000 cash and estimated to have : 1258948

 

 

 

206.A new machine costing $1,800,000 cash and estimated to have a $60,000 salvage value was purchased on January 1. The machine is expected to produce 600,000 units of product during its 8-year useful life. Calculate the depreciation expense in the first year under the following independent situations:1. The company uses the units-of-production method and the machine produces 70,000 units of product during its first year.2. The company uses the double-declining-balance method.3. The company uses the straight-line method.    

 

 

207.A company purchased a machine on January 1 of the current year for $750,000. Calculate the annual depreciation expense for each year of the machine’s life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000) using each of the below-mentioned methods. During the machine’s 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours. 

Straight-lineUnits-of-productionDouble-declining-balance

Year 1

Year 2

Year 3

Year 4

Year 5

Totals

  

 

 

 

 

208.A company purchased an equipment system for $325,000 on January 2. The company expects the equipment to last for eight years or 81,250 hours of operation, with no estimated salvage value. During the first year, the equipment was in operation for 8,000 hours, while in the second year, the equipment was in operation for 8,700 hours. Compute the depreciation expense relating to the equipment for Year 1 and Year 2 using the following depreciation methods: a. Straight-line. b. Double-declining-balance. c. Units-of-production.    

 

 

209.On January 1, a machine costing $260,000 with a 6-year life and an estimated $5,000 salvage value was purchased. It was also estimated that the machine would produce 500,000 units during its life. The actual units produced during its first year of operation were 110,000. Determine the amount of depreciation expense for the first year under each of the following assumptions:1. The company uses the straight-line method of depreciation.2. The company uses the units-of-production method of depreciation.3. The company uses the double-declining-balance method of depreciation.    

 

 

210.Suarez Company uses the straight-line method of depreciation. The company purchased a computer system on January 1, Year 1, for $1,600,000 with an expected life of six years and a salvage value of $130,000. Assuming the computer is sold on July 1, Year 3 for $1,000,000 cash, prepare the journal entries to record depreciation for the first 6 months of Year 3 and the sale of the computer.    

 

July 1Depreciation Expense122,500

Accumulated Depreciation—Computer122,500

[($1,600,000 – $130,000)/6 years * 6/12 = $122,500]

1Cash1,000,000

Accumulated Depreciation—Computer612,500

Computer Equipment1,600,000

Gain on Disposal of computer*12,500

 

 

 

 

211.A company paid $320,000 for equipment that was expected to last five years and to have a salvage value of $40,000. During the third year of the equipment’s life, $39,000 cash was paid for replacement parts that were expected to increase productivity by 10% each year. Prepare the journal entry to record the $39,000 cost incurred in the third year.    

 

 

 

 

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