Question

1.) On June 1, 2020, Hanes Company purchased 10 computers with an invoice price of $50,000. Other costs incurred were sales tax $2,100, Freight $300, installation of $2,300, testing of $300, prepaid insurance to cover the computers; $3,600. The computers are estimated to have a 5-year life and $5,000 salvage value.

Instructions:

1. Find the cost of new computers. ___________________________

   

2. What is depreciation for 2020 and 2021 if the company uses the double-declining balance method.

                    

                                

2020 ______________________________                                                           

2021 ______________________________                                                                

2.) A company purchased factory equipment for $700,000 on August 1, 2020. It is estimated that the equipment will have a $70,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be. (Round to whole dollars if necessary)

3.) A factory machine was purchased for $375,000 on November 1, 2021. It was estimated that it would have a $75,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2021. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2021 would be.

Answer 1