Determine the amount that Declan would capitalize

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Question - On January 1, 2015, Declan Company purchased a machine for $153,300. Declan paid $12,000 to ship the machine from the manufacturer in China and $3,200 in customs fees and $1,500 to rearrange the workspace to fit the machine. The machine had a $20,000 salvage value and a five -year useful life.

1. Determine the amount that Declan would capitalize as the cost of the machine.

2. Calculate the depreciation expense, accumulated depreciation and book value of the asset for all five years, assuming that Declan uses the double-declining balance method. (I recommend that you create a chart to work this part of the problem.

3. Assume that Declan sold the asset for $35,000 on December 31st, 2018. How much gain or loss would they recognize on the sale, assuming they used the a) Straight-line method and b) Double-Declining balance method?

Reference no: EM132482830

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