Buddy Corporation purchased a new machine for production on 1/1/18. The cost of the machine was $175,000.
Question:
Buddy Corporation purchased a new machine for production on 1/1/18. The cost of the machine was $175,000. The salvage value was estimated to be $25,000. Its useful life was estimated to be 5 years and its working hours was estimated at 25,000 hours. The hours used 2018 thru 2023 were 5,750, 5,000, 4,250, 5,500, 4,500, respectively. Year-end is December 31st. Fully depreciate the equipment through the full 5 years.
Instructions: Compute the depreciation expense under each of the following methods below. Record the journal entry for each year to record the depreciation expense.
5.1 Straight-Line method
5.2 Activity method
5.3 Double-Declining Balance method
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,