Zhang Machine & Dye bought a machine on January 2, 2014, for $460,000. The machine was expected

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Zhang Machine & Dye bought a machine on January 2, 2014, for $460,000. The machine was expected to remain in service for three years and produce 2,000,000 parts. At the end of its useful life, company officials estimated that, due to technological changes, the machine's residual value would only be $10,000. The machine produced 700,000 parts in the first year, 660,000 in the second year, and 650,000 in the third year.
Required
1. Prepare a schedule of amortization expense per year for the machine using the straight-line, UOP, and DDB amortization methods. Assume that in all cases the machine is valued at $10,000 at the end of the third year and the third-year amortization is adjusted (set as a plug) to ensure this happens.
2. Which amortization method results in the highest net income in the second year? Does this higher net income mean the machine was used more efficiently under this method?
3. Which method tracks the wear and tear on the machine most closely? Why?
4. After one year under the DDB method, the company switched to the straight-line method. Prepare a schedule of amortization expense for this situation, showing all calculations.
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Related Book For  book-img-for-question

Accounting Volume 1

ISBN: 978-0132690096

9th Canadian edition

Authors: Charles T. Horngren, Walter T. Harrison, Jo Ann L. Johnston, Carol A. Meissner, Peter R. Norwood

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