On January 1, 20X2, Miller Corp. purchased a milling machine for $450,000. It will be depreciated...

On January 1, 20X2, Miller Corp. purchased a milling machine for $450,000. It will be depreciated on a straight-line basis over 20 years. On January 1, 20X3, Miller purchased a heavy-duty lathe for $2,320,000, which will be depreciated on a straight-line basis over 40 years.

a) Compute Miller's depreciation expence for 20X2, 20X3, and 20X4. 20X2 20X3 20X4 $ $ $

b) Prepare the Fixed Asset portion of the balance sheet (for these two fixed assets) as of the end of 20X2, 20X3, and 20X4. (Hint: Subtract accumulated depreciation in each year from total original cost.)

20X2 20X3 20X4 $ $ $

Expert Solution

Depreciation	20X2	20X3	20X4
Milling Machine	22500	22500	22500
Lathe		58000	58000
Total expense	22500	80500	80500

BALANCE SHEET as on 31 December 20X2
Milling Machine
Opening book value	450000
Less: Accumulated depreciation	22500
Net book value		427500

BALANCE SHEET as on 31 December 20X3
Milling Machine
Opening book value	450000
Less: Accumulated depreciation	45000
Net book value	405000
Lathe
Opening book value	2320000
Less: Accumulated depreciation	58000
Net book value	2262000
Total fixed assets		2667000

BALANCE SHEET as on 31 December 20X4
Milling Machine
Opening book value	450000
Less: Accumulated depreciation	67500
Net book value	382500
Lathe
Opening book value	2320000
Less: Accumulated depreciation	116000
Net book value	2204000
Total fixed assets		2586500

Workings

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