Greenfield Incorporated is a publicly traded company that has a calendar year end. During the year 2020, the company had the transactions listed below. For this assignment, complete the following requirements: Part 1 On April 1, 2020, Greenfield Incorporated purchased machinery valued at $300,000. The estimated life of the machinery is 10 years. The machinery also has a salvage value of $60,000. Over the life of the machine, the estimated hours that the machine will be used is 30,000 hours. The corporation is comparing depreciation calculations using several acceptable depreciation methods. Compute the depreciation expense for the machine for years 2020 and 2021 using the following methods: Year 2020 Year 2021 A Straight-line (with half-year convention) $ $ B 200% declining balance (with half-year convention) $ $ C 150% declining balance (with half-year convention) $ $ D Units-of-output method (Hours used: 2,600 hrs in Year 2020 and 6,000 in Year 2021) $ $ E Straight-line (with depreciation calculated to the nearest whole month) $ $ Part 2 Select 1 of the depreciation methods above, and state why Greenfield Incorporated should use this method for financial reporting. Discuss the advantages and disadvantages of the depreciation method, the impact of using this method of depreciation on the financial statements as compared to other methods, and any professional judgment that the company would utilize when selecting a depreciation method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Greenfield Incorporated is a publicly traded company that has a calendar year end. During the year 2020, the company had the transactions listed below. For this assignment, complete the following requirements: Part 1 On April 1, 2020, Greenfield Incorporated purchased machinery valued at $300,000. The estimated life of the machinery is 10 years. The machinery also has a salvage value of $60,000. Over the life of the machine, the estimated hours that the machine will be used is 30,000 hours. The corporation is comparing depreciation calculations using several acceptable depreciation methods. Compute the depreciation expense for the machine for years 2020 and 2021 using the following methods: Year 2020 Year 2021 A Straight-line (with half-year convention) $ $ B 200% declining balance (with half-year convention) $ $ C 150% declining balance (with half-year convention) $ $ D Units-of-output method (Hours used: 2,600 hrs in Year 2020 and 6,000 in Year 2021) $ $ E Straight-line (with depreciation calculated to the nearest whole month) $ $ Part 2 Select 1 of the depreciation methods above, and state why Greenfield Incorporated should use this method for financial reporting. Discuss the advantages and disadvantages of the depreciation method, the impact of using this method of depreciation on the financial statements as compared to other methods, and any professional judgment that the company would utilize when selecting a depreciation method.

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