Question
In: Accounting
In recent years, Crane Company has purchased three machines. Because of frequent employee turnover in the...
In recent years, Crane Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.
|
Machine |
Acquired |
Cost |
Salvage |
Useful Life |
Depreciation |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
|
1 |
Jan. 1, 2020 | $126,000 | $16,000 | 10 | Straight-line | |||||
|
2 |
July 1, 2021 | 79,000 | 11,200 | 5 | Declining-balance | |||||
|
3 |
Nov. 1, 2021 | 71,900 | 7,900 | 6 | Units-of-activity |
For the declining-balance method, Crane Company uses the
double-declining rate. For the units-of-activity method, total
machine hours are expected to be 32,000. Actual hours of use in the
first 3 years were: 2021, 810; 2022, 6,400; and 2023, 7,900.
(a)
Compute the amount of accumulated depreciation on each machine at December 31, 2023.
|
MACHINE 1 |
MACHINE 2 |
MACHINE 3 |
||||
|---|---|---|---|---|---|---|
|
Accumulated Depreciation at December 31 |
$enter a dollar amount |
$enter a dollar amount |
$enter a dollar amount |
Solutions
Expert Solution
| Machine1: Straight-line depreciation | |
| Equipment cost | 126,000 |
| Salvage value | 16,000 |
| Depreciable cost | 110,000 |
| Divided: useful life in Years | 10 |
| Depreciation expense per year | 11,000 |
| Accumulated Depreciation at December 31, 2023 [Jan. 1, 2020 to Dec 31, 2023 = 4 years] (11000*4) | 44,000 |
.
| Machine2: Declining-balance depreciation | |
| Deprecation rate as per Straight line (1/5) | 20% |
| Deprecation rate as per Double Decline method (20%*2) | 40% |
| Equipment cost | 79,000 |
| Less: Depreciation expense for 2021 [July 1 to Dec 31 = 6 months) (79000*40%*6/12) | 15,800 |
| Book value at the end of 2021 | 63,200 |
| Less: Depreciation expense for 2022 (63200*40%) | 25,280 |
| Book value at the end of 2022 | 37,920 |
| Less: Depreciation expense for 2023 (37920*40%) | 15,168 |
| Book value at the end of 2023 | 22,752 |
| Depreciation expense for 2021 | 15,800 |
| Depreciation expense for 2022 | 25,280 |
| Depreciation expense for 2023 | 15,168 |
| Accumulated Depreciation at December 31, 2023 | 56,248 |
| Machine3: Unit of production | |
| Equipment cost | 71,900 |
| Less: Salvage value | 7,900 |
| Depreciable Value | 64,000 |
| Divided by: total machine hours | 32,000 |
| Depreciation per machine hour | 2 |
| Depreciation expense for 2021 (810*2) | 1,620 |
| Depreciation expense for 2022 (6400*2) | 12,800 |
| Depreciation expense for 2023 (7900*2) | 15,800 |
| Accumulated Depreciation at December 31, 2023 | 30,220 |
| MACHINE 1 | MACHINE 2 | MACHINE 3 | |
| Accumulated Depreciation at December 31, 2023 | 44,000 | 56,248 | 30,220 |
ekkarill92 answered 1 year agoRelated Solutions
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