On 1 July 2020, PMP Pty Ltd purchased a new printing machine for $200,000. The company expected
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Question:
On 1 July 2020, PMP Pty Ltd purchased a new printing machine for $200,000. The company expected the machine to be used for ten (10) years or 10,000 machine-hours, with an estimated residual value of $20,000 at the end of its useful life. Actual usage of the machine for the first three (3) years was noted as follows:
- Year 1: 500 hours
- Year 2: 800 hours
- Year 3: 3000 hours
Required:
- Calculate the depreciation expense for the second year using each of the methods below:
- Units of production
- Reducing balance method at the rate of 20% each year
Calculate the carrying amount of the machine at the end of year 2, assuming the straight – line method was used.
- Prepare the journal entry to record the sale of the machine, assuming that the straight – line method was used and the machine was sold at the end of year 2 for $150,000
Related Book For
Accounting
ISBN: 978-0324188004
21st Edition
Authors: Carl s. warren, James m. reeve, Philip e. fess
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