Reference no: EM133180536

Questions -

Q1) Luffy Company purchased equipment by issuing a note amounting to 1,000,000 due in 2 years. The equipment is normally sold at 930,000 under a 30-day credit period and receives a 30,000 discount if paid in cash. The equipment is expected to be sold at 100,000 after its 10-year life. The equipment has a normal production capacity of 10,000,000 units throughout its life and the manufacturer's manual stated that it will take 36,000 machine hours before any major repairs will be needed. The equipment was able to produce 1,200,000 units, 1,120,000 units, 1,000,000 units and 880,000 units for first four years. At normal production, every machine hour produces 300 units. Compute for the depreciation expense for the first year under the double declining balance method.

Q2) Halimuyak Company purchased a new service vehicle with fair value of 900,000 by paying 600,000 and trading their old service vehicle whose cost is 1,000,000 and accumulated depreciation is 850,000. At what amount will the new service vehicle be recorded?