Question

In: Accounting

AZA Company purchased a machine on July 1, 2019. The machine cost $400,000 and has an...

AZA Company purchased a machine on July 1, 2019. The machine cost $400,000 and has an estimated residual value of $40,000. The expected useful life is 8 years. The machine is to be used for 100,000 machine hours. AZA’s year end is December 31. Required:

a. Calculate the depreciation expense for 2019 and 2020 using the straight-line method. Also list the Accumulated Depreciation Balances at December 31, 2019 and December 31, 2020.

b. Calculate the depreciation expense for 2019 and 2020 using the units-of-production method. The machine was used for 8,000 machine hours in 2019 and 23,000 machine hours in 2020.

c. Calculate the depreciation expense for 2019 and 2020 using the double-declining-balance method.

d. Determine the book value of the machine at December 31, 2019 under the (a) straight-line method and (b) units-of-production, and (c) double-declining-balance method.

e. Write the journal entry for recording depreciation expense for year ended December 31, 2019 using the double declining balance depreciation method.

Solutions

Expert Solution


Related Solutions

Q1 A machine purchased on 1 July 2019 cost $100 000 and has a zero estimated...
Q1 A machine purchased on 1 July 2019 cost $100 000 and has a zero estimated salvage value. The useful life of the machine is five years. If the machine was sold on 30 September 2021, what would its net book value be? a. $55 000 b. $45 000 c. $50 000 d. $60 000 Q2 An impairment loss is calculated as the amount by which the: Select one: a. carrying amount value of an asset exceeds its original cost...
Duluth Ranch, Inc. purchased a machine on July 1, 2018. The cost of the machine was...
Duluth Ranch, Inc. purchased a machine on July 1, 2018. The cost of the machine was $34,000. Its estimated residual value was $10,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 2,500 units in 2018 and 3,200 units in 2019. Required: Part A - Calculate depreciation expense for 2018 and 2019 using the straight-line method. Part B - Calculate the depreciation expense for 2018 and 2019 using...
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine...
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has...
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine...
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has...
Jaguar Ltd purchased a machine on 1 July 2016 at a cost of $640,000. The machine...
Jaguar Ltd purchased a machine on 1 July 2016 at a cost of $640,000. The machine is expected to have a useful life of 5 years (straight line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that...
A manufacturing company has purchased a new machine for $400,000 with a lifetime of 10-years. The...
A manufacturing company has purchased a new machine for $400,000 with a lifetime of 10-years. The increased net income due to this machine is $90,000. The company’s tax rate is 40% and after-tax MARR is 12%. The company is planning to use the machine for 8 years and then sell it for $30,000. Develop tables using a spreadsheet to determine the after-tax cash flow for each year from 1 through 8. Calculate the after-tax PW and ERR after 8 years...
On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable...
On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours. Required: Using straight-line depreciation, prepare the journal entry to record depreciation expense for (a) the first year, (b) the second year, and (c) the last year on December 31. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS Andrew Company General Ledger ASSETS 110...
On January 1, 2019, Chelsea Company purchased for $180,000 a new machine that has an estimated...
On January 1, 2019, Chelsea Company purchased for $180,000 a new machine that has an estimated useful life of ten years (or 550,000 stamping operations), after which the expected salvage value is $10,000. Under each of the following depreciation methods, calculate the depreciation expense for 2019. Please show work :) Required: Straight-line depreciation Double-declining balance depreciation Units-of-production depreciation, if 66,000 stamping operations were made in 2019
1. Blue Spruce Corp. purchased a new machine on October 1, 2019, at a cost of...
1. Blue Spruce Corp. purchased a new machine on October 1, 2019, at a cost of $134,000. The company estimated that the machine will have a salvage value of $20,000. The machine is expected to be used for 10,000 working hours during its 5-year life. Compute the depreciation expense under straight-line method for 2019. (Round answer to 0 decimal places, e.g. 2,125.) 2019 Depreciation expense: 2. Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was...
Hey 7mate is a private company and it has purchased a printing machine in 2019. The...
Hey 7mate is a private company and it has purchased a printing machine in 2019. The company management would like to consult someone who is sufficiently knowledgeable on depreciation methods before choosing an appropriate method for depreciating the machine. They approached you for an advice and you are required to outline the impact of double declining method compared with straight line method of depreciation on financial statement analysis.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT