On January 1, 2022, Windsor Company purchased the following two machines for use in its production process.Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.Machine B: The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period.Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.)(1) Windsor uses the straight-line method of depreciation.(2) Windsor uses the declining-balance method. The rate used is twice the straight-line rate.(3) Windsor uses the units-of-activity method and estimates that the useful life of the machine is 102,000 units. Actual usage is as follows: 2022, 43,000 units; 2023, 30,000 units; 2024, 17,000 units; and 2025, 12,000 units. Depreciation Expense 2022 2023 2024 2025Straight-line method $enter a dollar amount $enter a dollar amount $enter a dollar amount $enter a dollar amount Declining-balance method $enter a dollar amount $enter a dollar amount $enter a dollar amount $enter a dollar amount Units-of-activity method $enter a dollar amount $enter a dollar amount $enter a dollar amount $enter a dollar amount On January 1, 2022, Windsor Company purchased the following two machines for use in its production process.The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550,shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil andMachine A:lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful lifeof the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that thestraight-line method of depreciation is used.The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 yearswith a $16,800 salvage value remaining at the end of that time period.Machine B: Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under thefollowing assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g.2,125.)(1)Windsor uses the straight-line method of depreciation.(2)Windsor uses the declining-balance method. The rate used is twice the straight-line rate.(3)Windsor uses the units-of-activity method and estimates that the useful life of the machine is 102,000 units. Actualusage is as follows: 2022, 43,000 units; 2023, 30,000 units; 2024, 17,000 units; and 2025, 12,000 units.Depreciation Expense20222023202420:Straight-linemethodDeclining-$balance$methodUnits-of-activity$$methodeTextbook and Media%24%24%24%24%24%24%24%24%24%24%24%24

Working: 1) Straight-line method: 180,000 - 16,8004163200440,800 2) Declining balance method 100% of cost / 4 years = 25% Double of straightline % = 50% Book Value at beginning of the year ($) DDB rate Annual Depreciation Expense ($) Accumulated Depreciation ($) 180,000 50% 90,000 90,000 90,000 50% 45,000 135,000 45,000 50% 22,500 157,500 22,500 50% 5,700 (163,200-157,500) 163,200 3) Units of Activity method: Total units produced = 102,000 units Depreciation per unit =180,000 - 16,800102,000 units=163,200102,000=$1.6 per unit Year Units Depreciation per unit Amount 2022 43,000 1.6 68,800 2023 30,000 1.6 48,000 2024 17,000 1.6 27,200 2025 12,000 1.6 19,200 Calculation of Depreciation expenses for Machine B 2022 2023 2024 2025 Straight-line method 40,800 40,800 40,800 40,800 Declining-balance method 90,000 45,000 22,500 5,700 Units-of-activity method 68,800 48,000 27,200 19,200

On January 1, 2022, Windsor Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period. Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.) (1) Windsor uses the straight-line method of depreciation. (2) Windsor uses the declining-balance method. The rate used is twice the straight-line rate. (3) Windsor uses the units-of-activity method and estimates that the useful life of the machine is 102,000 units. Actual usage is as follows: 2022, 43,000 units; 2023, 30,000 units; 2024, 17,000 units; and 2025, 12,000 units.

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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Question

On January 1, 2022, Windsor Company purchased the following two machines for use in its production process.

Machine A:		The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B:		The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period.

Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g. 2,125.)

(1)		Windsor uses the straight-line method of depreciation.
(2)		Windsor uses the declining-balance method. The rate used is twice the straight-line rate.
(3)		Windsor uses the units-of-activity method and estimates that the useful life of the machine is 102,000 units. Actual usage is as follows: 2022, 43,000 units; 2023, 30,000 units; 2024, 17,000 units; and 2025, 12,000 units.

	Depreciation Expense
	2022	2023	2024	2025
Straight-line method	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
Declining-balance method	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
Units-of-activity method	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount

On January 1, 2022, Windsor Company purchased the following two machines for use in its production process.
The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550,
shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and
Machine A:
lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life
of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the
straight-line method of depreciation is used.
The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years
with a $16,800 salvage value remaining at the end of that time period.
Machine B:

Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under the
following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to 0 decimal places, e.g.
2,125.)
(1)
Windsor uses the straight-line method of depreciation.
(2)
Windsor uses the declining-balance method. The rate used is twice the straight-line rate.
(3)
Windsor uses the units-of-activity method and estimates that the useful life of the machine is 102,000 units. Actual
usage is as follows: 2022, 43,000 units; 2023, 30,000 units; 2024, 17,000 units; and 2025, 12,000 units.
Depreciation Expense
2022
2023
2024
20:
Straight-
line
method
Declining-
$
balance
$
method
Units-of-
activity
$
$
method
eTextbook and Media
%24
%24
%24
%24
%24
%24
%24
%24
%24
%24
%24
%24

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