The following information pertains to the equipment acquired by Xie Co. on January 1, 20x6. Use this information to answer parts (a), (b), and (c). 

 

Required  

a. Determine the depreciation expense for the year ending December 31, 20x6, assuming the company uses the: 

i)  straight-line method 

ii) units-of-production method 

b. On January 1, 20x7, due to a preventative maintenance system that had been implemented, management felt that the total estimated life of the equipment would be 5 years with a total estimated production of 50,000 units. Accordingly, the estimates were revised. In 20x7, 12,000 units were produced. No change in estimated residual value was anticipated.

Determine the depreciation expense for the year ending December 31, 20x7, assuming the company uses the: 

i) straight-line method 

ii) units-of-production method On January 1, 20x8, the equipment was sold for $75,000. 

с. Prepare the journal entry to record the sale assuming the company uses the:

i) straight-line method 

ii) units-of-production method

Transcribed Image Text:

Cost Estimated residual value Estimated life Estimated production 20x6 actual production $120,000 $ 20,000 4 years 40,000 units 9,000 units Cost Estimated residual value Estimated life Estimated production 20x6 actual production $120,000 $ 20,000 4 years 40,000 units 9,000 units

Answer rating: 100% (QA)

Solution Q a Depreciation expenses for 20x6 i Straight line method Depreciation expenses Cost residual value life of Equipment Depreciation expenses 120000 20000 4 Depreciation expenses 100000 4 Depre... View the full answer