In January 2016, JN Norman Inc. (JNN) purchased and installed production equipment. It was first available for
Question:
In January 2016, JN Norman Inc. (JNN) purchased and installed production equipment. It was first available for use on March 1, 2016. JNN has a December 31 year-end and accounts for partial years using the number of months that the asset is available for use. The following data were available for the machine:
Cost ............................................................................................... $100,000
Delivery ........................................................................................ 1,000
Installation ................................................................................... 6,000
Testing .......................................................................................... 3,000
Refundable sales taxes ............................................................ 5,000
Estimated residual value at end of useful life .................... 4,000
Estimated useful life ................................................................. 8 years
Estimated total units of production over useful life ........ 40,000 units
Actual production 2015 .......................................................... 4,000 units
Actual production 2016 .......................................................... 7,000 units
Required:
a. Calculate depreciation expense for 2016 and 2017 using the straight-line method.
b. Calculate depreciation expense for 2016 and 2017 using the double-declining-balance method. (2 / 8 = 25%).
c. Calculate depreciation expense for 2016 and 2017 using the units-of-production method.
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