Reference no: EM132359691
Question
On January 1, 2020, Sheffield company purchased the following two machines for use in his production process.
Machine A: The cash price of this machine was $46,500. Related expenditures included: sales tax $3,700, shipping cost $100, insurance during shipping $50, installation and testing costs $70, and $200 of oil and lubricants to be used with the machinery during its first year of operation. Sheffield estimates that the useful life of the machine is 5 years with the a $4,300 salvage valued 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. Sheffield estimates that the useful life is 4 year with a $10,150 salvage value remaining at the end of that time period.
Prepare the following for machine A:
The journal entry to record its purchase on January 1, 2020.
The journal entry to record annual depreciation at December 31, 20202.
Calculate the amount of depreciation expense that Sheffield should record for Machine B each year of its useful life under the following assumptions.
Sheffield uses the straight-line method depreciation method.
Sheffield uses the declining-balance method. the rate used is twice the straight-line rate.
Sheffield uses the units-of-activity method and estimates and estimates that the useful life is 135,880 units. Actual usage is as follow: 2020, 50,000 units; 2021, 38,500 units; 2022, 27,000 units; 2023, 20,380 units.
Which method used to calculate depreciation on machine B reports the highest amount of depreciation expense in year 1 (2020).
The highest amount in year 4 (2023)?
The highest total amount over the 4 year period?
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