On January 1, 1978, the purchasing engineer of Itadori Co. purchased a new hydraulic machine at a cost of 140,000. Depreciation has been computed by the straight-line method based on an estimated useful life of five years and a residual scrap value of 12,800. On January 2, 1981, extraordinary repairs (which were almost equivalent to a rebuilding of machinery) were performed at a cost of 30,400. Because of the thoroughgoing nature of these repairs, the normal life of the machinery was extended materially. The revised estimate of useful life was four years from January 1, 1981. Determine the annual provision for depreciation for the years 1978 to 1980.

On January 1, 1978, the purchasing engineer of Itadori Co. purchased a new hydraulic machine at a cost of 140,000. Depreciation has been computed by the straight-line method based on an estimated useful life of five years and a residual scrap value of 12,800. On January 2, 1981, extraordinary repairs (which were almost equivalent to a rebuilding of machinery) were performed at a cost of 30,400. Because of the thoroughgoing nature of these repairs, the normal life of the machinery was extended materially. The revised estimate of useful life was four years from January 1, 1981. Determine the annual provision for depreciation for the years 1978 to 1980.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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