121500 10 at 31 of SolutionAccumulated Depreciation of Machi

Solution

Accumulated Depreciation of Machine 1 at December 31, 2018

Jan. 1, 2015; Cost $121,500; Salvage Value $11,500; Useful Life (in years) 10; Use SLM Method

Annual Depreciation: ($121,500-$11,500)/10 = $11,000

So, Accumulated depreciation on December 31, 2018 = $44,000

Accumulated Depreciation of Machine 2 at December 31, 2018

Jul. 1, 2016; Cost $71,000; Salvage Value $12,000; Useful Life (in years) 5; Use DD Method

If useful life is 5 years, straight-line rate is 20%, so DDB rate is 40%
Cost $71,000
2016 Depreciation = $14,200 (71,000 x 40% x 6/12)
Net Book Value at end 2016 $56,800
2017 Depreciation = $22,720 (56,800 x 40%)
Net Book Value at end 2017 $34,080
2018 Depreciation = $13,632 (34080 * 40%)

So Accumulated Depreciation at December 31, 2018 = $50,552

Accumulated Depreciation of Machine 3 at December 31, 2018

Nov. 1, 2016; Cost $68,100; Salvage Value $8,100; Useful Life (in years) 6; Use UOA Method

Depreciation per unit = 60,000/30,000 = $2.00

2016 Depreciation = 710 x $2.00 = 1,420
2017 Depreciation = 5900 x $2.00 = 11,800
2018 Depreciation = 7300 x $2.00 = 14,600

So Accumulated Depreciation at December 31, 2018 = $27820

(b) 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?

Apr. 1, 2016; Cost $71,000; Salvage Value $12,000; Useful Life (in years) 5; Use DD Method

If useful life is 5 years, straight-line rate is 20%, so DDB rate is 40%
Cost $71,000
2016 Depreciation = $21,300 (71,000 x 40% x 9/12)
Net Book Value at end 2016 $49,700
2017 Depreciation = $19,880 (49,700 x 40%)

Depreciation Expense for 2016 = $21300 & For 2017 = $19800