The company expects machine X to last five years and to have a residual value of $4,600 when it is removed from service, and itexpects machine Y to be useful for eight more years and have a residual value of $14,990 at that time. Due to the differentcharacteristics of the two machines, different depreciation methods will be used for them: machine X will be depreciated using thedouble-diminishing-balance method and machine Y using the straight-line method.Prepare the journal entry to record the purchase of the machines, indicating the initial cost of each. (Credit account titles areautomatically indented when the amount is entered. Do not indent manually. Round percentage to 1 decimal place, for e.g. 40.1 and Roundanswers to the nearest whole dollar, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Approach to solving the question: Let's assume the initial costs are as follows:Machine X initial…

Answered: The company expects machine X to last…

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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ABC corporation makes it policy that for any new equipment purchased the length of service must be nine years. Find the ratio between annual depreciation cost and first cost, if the salvage value is zero using SOYD method.
A machine with a cost of $57,300 has an estimated residual value of $3,956 and an estimated life of 5 years or 20,000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?
Sunland Company purchased a truck for $46,000. The company expected the truck to have a useful life of four years or 95,000 kilometres, with an estimated residual value of $8,000 at the end of that time. During the first and second years, the truck was driven 21,000 and 27,500 kilometres, respectively. Calculate the depreciation expense for the second year under the straight-line, units-of-production, and double-diminishing-balance methods. Assume the purchase of the truck was made at the beginning of the first month of the first year. (Round depreciation per kilometre to 2 decimal places, e.g. 1.25 and final answers to O decimal places, e.g. 5,275.) Straight-line method Units-of-production method $ GA LA Double-diminishing-balance method $ GA Year 2 Depreciation Expense
A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?
Anne Company has an equipment costing P700,000 with an estimated residual value of P70,000 and an estimated useful life of six years. After using and depreciating the asset for the past two years, the company upgraded the machine parts and the cost of upgrading amounted to P120,000. Assuming that the upgrading costs extended the asset’s economic useful life by an additional two years, what is the revised depreciation expense for the third year using the (1) straight-line method and (2) sum-of-the-years’ digits method? a. (1) P90,000 and (2) P140,000 b. (1) P90,000 and (2) P120,000 c. (1) P101,667 and (2) P140,000 d. (1) P101,667 and (2) P120,000
This is my last attempt. Please answer correctly. I will rate accordingly
Super Mega Business Corporation (SMBC) is purchasing a $20 million machine. It will cost $50,000 to transport and install the machine. The machine has a depreciable life of five years. It will have no salvage value. For their financial statements, SMBC always use the straight-line depreciation method. A) What are the straight-line depreciation expenses associated with this machine in year 2 after the purchase? B) What is the machine’s depreciation tax shield in year 3 after the purchase, assuming the SMBC’s marginal tax rate is 20%? C) Assume the MACRS depreciation schedule for this type of machine runs over three years and assigns the following percentage values: 20%, 50% and 30%. What is the MACRS depreciation expense in year 2? D) Assume the company can either buy the machine in January or December of the first year. Which one will generate more MACRS depreciation in the first year and why? With explanation please.
A machine with a cost of $50,000 has an estimated residual value of $5,000 and an estimated useful life of 10 years. What is the amount of annual depreciation computed by the straight-line method?
Cari Heat (CH) Ltd. is currently faced with a critical decision regarding its production equipment. Cari Heat (CH) is evaluating two options for its production equipment: upgrading or replacing. The company manufactures and sells 7,500 heaters every year, each priced at $920. The current production equipment, which was acquired at a cost of $2,150,000, has been in use for just two years and is subject to straight-line depreciation over a five-year useful life. Furthermore, it possesses no terminal disposal value, but it can be currently sold for $650,000. The following table presents data for the two alternatives: ABC 1 Choice Upgrade Replace 2 One-time equipment costs $3,500,0003 Variable manufacturing cost per Heater $180 $90 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment 0 0 Required 1. Prepare a schedule, for the remaining 3 years, reflecting whether CH should upgrade its production line or replace it?
The M&M Company purchased a new punchpress in 2005 at a cost of $265,000. M&M alsopaid $46,000 to have the punch press delivered andinstalled. The punch press has an estimated useful lifeof 12 years, but it will be depreciated using MACRSover its seven-year property class life.(a) What is the cost basis of the punch press?(b) What will be the depreciation allowance in eachyear over seven years?
Assume that a firm expects to be able to liquidate the new machine, which cost $400, 000, at the end of its 5- year usable life to net $42, 000 after paying removal and cleanup costs. Had it not been replaced by the new machine, the old machine, which initially cost $240,000 and was used for 3 years before being replaced, would have been liquidated at the end of the 5 years (i. e., the same time the new machine is liquidated) to net $ 10,000. The firm expects to recover its $17,000 net working capital investment upon termination of the project. The firm pays taxes at a rate of 40%. The firm depreciated both machines using a 5-yr MACR schedule as follows: 20%, 32%, 19%, 12%, 12%, 5%. Calculating the terminal cash flow for this machine.
A copy machine cost $95,000 and has an estimated residual value of $5,000. It is expected to last about ten years and to make a total of 3,000,000 copies. 200,000 copies are made in Year 1, 300,000 in Year 2, and 450,000 in Year 3. Units-of-Activity depreciation is used.What is the balance in the Accumulated Depreciation account at the end of Year 3?

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