Reference no: EM133162970

Question - At the beginning of the year, Canary.com bought a shed, a machine, and a trailer.

The shed initially cost $21,100 but had to be renovated at a cost of $700. The shed was expected to last 7 years, with a residual value of $1,850. Repairs costing $520 were incurred at the end of the first year of use.

The machine cost $11,650, and is estimated to have a total life of 40,000 hours and residual value of $900. The machine was actually used 2,000 hours in year 1 and 4,000 hours in year 2.

The trailer cost $12,100 and was expected to last 4 years, with a residual value of $2,000

1. Compute the amount to be capitalized for the shed.

2. Compute year 2 straight-line depreciation expense for the shed and prepare the journal entry to record it.

3. Compute year 2 units-of-production depreciation expense for the machine.

4. Prepare the journal entry to record year 2 units-of-production depreciation expense for the machine.

5. Compute years 1 and 2 double-declining-balance depreciation expense for the trailer.

6. Prepare the journal entry to record year 2 double-declining balance depreciation expense for the trailer.