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Calculate the depreciation expense

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Reference no: EM133112020

Question - On July 1, 2020, Anna Inc. purchased a machinery at $350,000 to produce a new product. Asma paid $10,000 for shipping, $5,000 for legal fees, $4,500 for installation of the machinery and 3.500 for testing fees. Asma also had to repair one part of the Machinery that was waged during the testing, which cost $1,000. Asma has a fiscal year end of December.

The machinery's useful life is 15 years or 650,000 units of the new product. Its residual value is estimated as $50,000. Asma uses double declining method to calculate depreciation.

Required -

1) Calculate the Machinery total cost at acquisition.

2) On December 31, 2021, Asma changed its estimation of residual value to 65.000. Calculate the depreciation expense for 2021.

3) The Machinery was sold on December 31, 1022 for $270.000 cash. Prepare the journal entry to record the sale.

Reference no: EM133112020

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