A company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and a useful life of 6 years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1500 hours in year 4; 1200 hours in year 5 and 1,000 hours in year 6.
1.) Compute the annual depreciation and carrying value for the new crane for each of the 6 years (round to the nearest whole dollar) under each of the following methods: (a) straight-line (b) production and (c) double-declining balence.
2.) Prepare the adjusting entry that would be made each year to record the depreciation calculated under the straight-line method.
3.) Show the balence sheet presentation for the crane after the adjusting entry in year 2 using straight-line method.
4.) What conclusions can you draw from the patterns of yearly depreciation and carring value in 1?