In recent years, Carla Vista Co. has purchased three machines. Because of frequent employee turnover in the
Question:
In recent years, Carla Vista Co. has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.
Machine | Acquired | Cost | Salvage | Useful Life | Depreciation | |||||
---|---|---|---|---|---|---|---|---|---|---|
1 | Jan. 1, 2015 | $ 123,000 | $ 43,000 | 8 | Straight-line | |||||
2 | July 1, 2016 | 76,000 | 10,700 | 5 | Declining-balance | |||||
3 | Nov. 1, 2016 | 76,800 | 6,800 | 6 | Units-of-activity |
For the declining-balance method, Carla Vista Co. uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 35,000. Actual hours of use in the first 3 years were: 2016, 840; 2017, 3,700; and 2018, 4,900.
1) Compute the amount of accumulated depreciation on each machine at December 31, 2018.
2) If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2016? In 2017?
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso