Sarasota Corp. purchased Machine no. 201 on May 1, 2020. The following information relating to Machine no. 201 was gathered at the end of May: Price $93,000 Credit terms 2/10, n/30 Freight-in costs $900 Preparation and installation costs $4,200 Labour costs during regular production operations $11,500 It was expected that the machine could be used for 10 years, after which the residual value would be zero. However, Sarasota intends to use the machine for only eight years and expects to then be able to sell it for $1,800. The invoice for Machine no. 201 was paid on May 5, 2020. Sarasota has a December 31 year end. Depreciation expense should be calculated to the nearest half month. Sarasota follows IFRS for financial statement purposes.

Sarasota Corp. purchased Machine no. 201 on May 1, 2020. The following information relating to Machine no. 201 was gathered at the end of May: Price $93,000 Credit terms 2/10, n/30 Freight-in costs $900 Preparation and installation costs $4,200 Labour costs during regular production operations $11,500 It was expected that the machine could be used for 10 years, after which the residual value would be zero. However, Sarasota intends to use the machine for only eight years and expects to then be able to sell it for $1,800. The invoice for Machine no. 201 was paid on May 5, 2020. Sarasota has a December 31 year end. Depreciation expense should be calculated to the nearest half month. Sarasota follows IFRS for financial statement purposes.

Name: %24%24%24%24Calculate the depreciation expense for the years indicate
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Description: %24%24%24%24Calculate the depreciation expense for the years indicated using the following methods. (Do not round intermediate ceround final answers to 0 decimal places, e.g. 5,275.)1. Straight-line method for the fiscal years ended December 31, 202

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

%24
%24
%24
%24
Calculate the depreciation expense for the years indicated using the following methods. (Do not round intermediate ce
round final answers to 0 decimal places, e.g. 5,275.)
1. Straight-line method for the fiscal years ended December 31, 2020 and 2021
2. Double-declining-balance method for the fiscal years ended December 31, 2020 and 2021
2020
2021
1. Straight-line
2. Double-declining balance

Sarasota Corp. purchased Machine no. 201 on May 1, 2020. The following information relating to Machine no. 201 was gathered at
the end of May:
Price
$93,000
Credit terms
2/10, n/30
Freight-in costs
$900
Preparation and installation costs
$4,200
Labour costs during regular production operations
$11,500
It was expected that the machine could be used for 10 years, after which the residual value would be zero. However, Sarasota intends
to use the machine for only eight years and expects to then be able to sell it for $1,800. The invoice for Machine no. 201 was paid on
May 5, 2020. Sarasota has a December 31 year end. Depreciation expense should be calculated to the nearest half month. Sarasota
follows IFRS for financial statement purposes.

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