Heist Company purchased a machine on January 2, 2019, and uses the 150%-declining-balance depreciation method. The machine has an expected life of 10 years and an expected residual value of $5,000. The following costs relate to the acquisition and use of the machine during the first year of its operations: Invoice price $50,000 Testing $ 1,100Discounts available and taken 1,000 Normal spoilage of materials during the year 750Freight 700 Abnormal spoilage of materials during the year 250Installation 900 Wages of machine operator 15,000Required: Compute the depreciation expense for 2019 and 2020. What is the effect on the financial statements if the company used the straight-line method instead of the 150%-declining-balance method?
Heist Company purchased a machine on January 2, 2019, and uses the 150%-declining-balance
Invoice price $50,000 Testing $ 1,100
Discounts available and taken 1,000 Normal spoilage of materials during the year 750
Freight 700 Abnormal spoilage of materials during the year 250
Installation 900 Wages of machine operator 15,000
Required:
Compute the depreciation expense for 2019 and 2020.
What is the effect on the financial statements if the company used the straight-line method instead of the 150%-declining-balance method?
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