In recent years, Pina Colada Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Salvage Useful Life Depreciation Machine Acquired Cost Value (in years) Method 1 Jan. 1, 2020 $ 100,100 $ 12,500 8. Straight-line July 1, 2021 92,000 10,000 5 Declining-balance 3 Nov. 1, 2021 123,000 9,000 Units-of-activity For the declining-balance method, Pina Colada Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 38,000. Actual hours of use in the first 3 years were 2021, 600; 2022, 4,200; and 2023, 7,300.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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In recent years, Pina Colada Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.

| Machine | Acquired    | Cost     | Salvage Value | Useful Life (in years) | Depreciation Method    |
|---------|-------------|----------|---------------|-----------------------|------------------------|
| 1       | Jan. 1, 2020 | $100,100 | $12,500       | 8                     | Straight-line          |
| 2       | July 1, 2021 | $92,000  | $10,000       | 5                     | Declining-balance      |
| 3       | Nov. 1, 2021 | $123,000 | $9,000        | 6                     | Units-of-activity      |

For the declining-balance method, Pina Colada Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 38,000. Actual hours of use in the first 3 years were 2021, 600; 2022, 4,200; and 2023, 7,300.
Transcribed Image Text:In recent years, Pina Colada Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. | Machine | Acquired | Cost | Salvage Value | Useful Life (in years) | Depreciation Method | |---------|-------------|----------|---------------|-----------------------|------------------------| | 1 | Jan. 1, 2020 | $100,100 | $12,500 | 8 | Straight-line | | 2 | July 1, 2021 | $92,000 | $10,000 | 5 | Declining-balance | | 3 | Nov. 1, 2021 | $123,000 | $9,000 | 6 | Units-of-activity | For the declining-balance method, Pina Colada Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 38,000. Actual hours of use in the first 3 years were 2021, 600; 2022, 4,200; and 2023, 7,300.
For Machine #3, calculate the depreciable cost per hour under the units-of-activity method.

**Depreciable cost**: $ ___ per hour

Explanation:
This section prompts the user to calculate the cost of depreciation for Machine #3 on an hourly basis using the units-of-activity method. The units-of-activity method allocates depreciation based on the actual usage or output of the asset. The user is expected to fill in the blank with the appropriate value calculated based on the machine's usage data and its total depreciable base.
Transcribed Image Text:For Machine #3, calculate the depreciable cost per hour under the units-of-activity method. **Depreciable cost**: $ ___ per hour Explanation: This section prompts the user to calculate the cost of depreciation for Machine #3 on an hourly basis using the units-of-activity method. The units-of-activity method allocates depreciation based on the actual usage or output of the asset. The user is expected to fill in the blank with the appropriate value calculated based on the machine's usage data and its total depreciable base.
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