On January 1, 2020, Button Inc. purchased the following two machines for use in its productionprocess.Machine A: Electric ForkliftCash Price:$50,000Other Expenditures included:Sales Tax$2,000Shipping CostsInsurance During Shipping$250$100Installation and Testing Costs:$100Oil and Lubricants to be used with the machinery during the firstyear of operationsButton estimates that the useful life of the machine is 5 years with a $4,000 residual valueremaining at the end of that time period. Assume that the straight-line method of depreciationis used.$500Machine B: Gas-Powered WheelbarrowRecorded Cost:$115,000Button estimates that the useful life of the machine is 5 years with a $10,000 residual valueremaining at the end of that time period.Required:1. For the electric forklift:а.What is the cost that Button should record for the purchase on January 1, 2020?b. What is the depreciation expense to be recorded in 2020?c. At the end of Year 3 (2022), Button reassesses and concludes that the machine hasremaining useful life of 4 years with a residual value of $1,000. What is the reviseannual depreciation?. For the gas-powered wheelbarrow:a. Calculate the amount of deprecation Button Inc. should record:а. A For the year of 2021, assuming that Button uses the straight-line method ofdepreciationFor the year of 2021, assuming that Button uses the double-declining-balancemethod.**. For the year of 2021, assuming that Button uses the units-of-activity method andestimates that the useful life of the machine is 150,000 units. Actual usage for eachyear is as follows:YearUnits2020202120222023202445,00040,00035,00020,00010,000b. Which method used to calculate depreciation on the gas-powered wheelbarrow reportsthe highest amount of depreciation expense in 2020? The highest total amount over the 4year period?c. If the company sells the gas-powered wheelbarrow on June 30, 2022, for $58,000 cash,would Button Inc. record a gain or loss of how much for this sale? Assuming that Butteuses the straight-line method of depreciation.

Name: On January 1, 2020, Button Inc. purchased the following two machines
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Description: On January 1, 2020, Button Inc. purchased the following two machines for use in its productionprocess.Machine A: Electric ForkliftCash Price:$50,000Other Expenditures included:Sales Tax$2,000Shipping CostsInsurance During Shipping$250$100Installatio

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On January 1, 2020, Button Inc. purchased the following two machines for use in its production process. Machine A: Electric Forklift Cash Price: $50,000 Other Expenditures included: Sales Tax $2,000 Shipping Costs Insurance During Shipping Installation and Testing Costs: $250 $100 $100 Oil and Lubricants to be used with the machinery during the first year of operations Button estimates that the useful life of the machine is 5 years with a $4,000 residual value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. $500 Machine B: Gas-Powered Wheelbarrow Recorded Cost: $115,00C Button estimates that the useful life of the machine is 5 years with a $10,000 residual value remaining at the end of that time period. Required: 1. For the electric forklift: а. What is the cost that Button should record for the purchase on January 1, 2020? b. What is the depreciation expense to be recorded in 2020? c. At the end of Year 3 (2022), Button reassesses and concludes that the machine ha remaining useful life of 4 years with a residual value of $1,000. What is the revis annual depreciation?

On January 1, 2020, Button Inc. purchased the following two machines for use in its production process. Machine A: Electric Forklift Cash Price: $50,000 Other Expenditures included: Sales Tax $2,000 Shipping Costs Insurance During Shipping Installation and Testing Costs: $250 $100 $100 Oil and Lubricants to be used with the machinery during the first year of operations Button estimates that the useful life of the machine is 5 years with a $4,000 residual value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. $500 Machine B: Gas-Powered Wheelbarrow Recorded Cost: $115,00C Button estimates that the useful life of the machine is 5 years with a $10,000 residual value remaining at the end of that time period. Required: 1. For the electric forklift: а. What is the cost that Button should record for the purchase on January 1, 2020? b. What is the depreciation expense to be recorded in 2020? c. At the end of Year 3 (2022), Button reassesses and concludes that the machine ha remaining useful life of 4 years with a residual value of $1,000. What is the revis annual depreciation?

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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