Beans Company purchased a special machine at a cost of $ 81,000 plus provincial sales tax of $ 6,480 (non- recoverable). The machine is expected to have a residual value of $ 6,000 at the end of its service life. To assist in preparing the journal entries for depreciation of this machine, your assistant prepared the following spreadsheet:

The spreadsheet includes statistics relating to the machine and calculates depreciation using three different methods— productive output, straight- line, and declining balance at a 50% rate. However, due to some carelessness, your assistant made at least one error in the calculations for each method.

1. Identify which method is the:
a. Productive method.
b. Straight- line method.
c. Declining- balance method ( 50% rate).
2. Describe the error(s) made in the calculations for each method.
3. Recalculate depreciation expense for Year 2 under eachmethod.

  • CreatedFebruary 17, 2015
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