e A - The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Alkek estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B - The recorded cost of this machine was $160,000. Alkek estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Calculate the amount of depreciation expense that Alkek Company should record for machine A and B (seperately) for each year of its useful life under the following assumptions. (a) Alkek uses the straight-line method of depreciation. (b) Alkek uses the declining-balance method. The rate used is twice the straight-line rate. (c) Alkek uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2015, 45,000 units; 2016, 35,000 un
On January 1, 2022, Alkek Company purchased the following two machines for use in its production process.
Machine A - The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Alkek estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of
Machine B - The recorded cost of this machine was $160,000. Alkek estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.
Calculate the amount of depreciation expense that Alkek Company should record for machine A and B (seperately) for each year of its useful life under the following assumptions.
(a) Alkek uses the straight-line method of depreciation.
(b) Alkek uses the declining-balance method. The rate used is twice the straight-line rate.
(c) Alkek uses the units-of-activity method and estimates that the useful life of the machine is
125,000 units. Actual usage is as follows: 2015, 45,000 units; 2016, 35,000 units; 2017,
25,000 units; 2018, 20,000 units.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| Aa | Straight Line | |||||
| Ab | Declining Balance | |||||
| Ac | Units-of-Activity |
| Year 1 | Year 2 | Year 3 | Year 4 | ||
| Ba | Straight Line | ||||
| Bb | Declining Balance | ||||
| Bc | Units-of-Activity |
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