Reference no: EM132775060
Question - Cheery Cobbler Inc. purchased a machine on July 1, 2020 for use in manufacturing shoes. Cheery has a year end of December 31. Information pertaining to this machine follows:
Amount paid to acquire the machine $643,066
Estimated useful life of machine (in years) 9
Estimated physical life of machine (in years) 11
Estimated residual value (at end of estimated useful life) $25,723
Estimated salvage value (at end of physical life) $6,431
Total estimated number of units to be produced during asset's life 378,000
Number of units produced during 2020 37,343
Number of units produced during 2021 54,814
REQUIRED -
a) Assume that Cheery follows IFRS.
i) Determine the 2020 and 2021 depreciation expense assuming the straight-line method is used.
ii) Determine the 2020 and 2021 depreciation expense assuming the units-of-production method is used.
b) Assume that Cheery follows ASPE. Determine the 2020 and 2021 depreciation expense assuming that the straight-line method is used.
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