Problem 5 17 points Part A A machine that cost 256000 has an

Problem 5 (17 points) Part A A machine that cost $256,000 has an estimated residual value of $16,000 and an estimated useful life of 16,000 machine hours. The company uses units-of-production depreciation and ran the machine 4,000 hours in year 1, 5,000 hours in year 2, and 4,000 hours in year 3. Complete the following tables (show work) n expense Year 1 Year 2 Year 3 Book Value Depreciation At the end of year 3 Part B A machine that cost $130,000 has an estimated residual value of $13,000 and an estimated useful life of four years. The company uses double-declining-balance depreciation. Complete the following tables (show work) Year 1 Year 2 Year 3 Book Value At the end of year 3 Part C As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc. sold shelving units (recorded as Equipment) that were 10 years old for $1,280 cash. The shelves originally cost $8,320 and had been deprociated on a straight-line basis over an estimated useful life of 10 years with an estimated residual value of $720. Prepare the journal entry to record the sale of the shelving units.

Solution

Solution A:

Accumulated depreciation at the end of 3rd year = $195,000 and book value = $61,000

Solution B:

Cost of machine = $130,000

Estimated life = 4 Years

Depreciation rate - SLM = 1/4 = 25%

Depreciation rate - DDB = 25% *2 = 50%

Accumulated depreciation at the end of year 3 = $113,750

Book value = $16,250

Solution C:

Depreciation Schedule - Unit of Production Method
Year	Production hours	Estimated total production hours	Depreciation Expense	Accumulated Depreciation	Net Book Value
Acquisition Cost					$256,000.00
1	4000	16000	$60,000.00	$60,000.00	$196,000.00
2	5000	16000	$75,000.00	$135,000.00	$121,000.00
3	4000	16000	$60,000.00	$195,000.00	$61,000.00