Reference no: EM132474507

(A) On January 1, 2020, Concord Company purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was $37,500. Related expenditures included: sales tax $2,000, shipping costs $150, insurance during shipping $110, installation and testing costs $120, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Concord estimates that the useful life of the machine is 5 years with a $4,500 salvage value 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. Concord estimates that the useful life of the machine is 4 years with a $10,200 salvage value remaining at the end of that time period.

Prepare the following for Machine A.

Question 1: The journal entry to record its purchase on January 1, 2020.?

Question 2: The journal entry to record annual depreciation at December 31, 2020.?

Calculate the amount of depreciation expense that Concord should record for Machine B each year of its useful life under the following assumptions.

Question 1: Concord uses the straight-line method of depreciation.?

Question 2: Concord uses the declining-balance method. The rate used is twice the straight-line rate?

Question 3: Concord uses the units-of-activity method and estimates that the useful life of the machine is 141,500 units. Actual usage is as follows: 2020, 49,500 units; 2021, 39,000 units; 2022, 28,500 units; 2023, 24,500 units.

Question 4: Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2020)?

Question 5: The highest amount in year 4 (2023)?

Question 6: The highest total amount over the 4-year period?

(B) At the beginning of 2018, Bridgeport Company acquired equipment costing $187,400. It was estimated that this equipment would have a useful life of 6 years and a salvage value of $18,740 at that time. The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year.

• During 2020 (the third year of the equipment's life), the company's engineers reconsidered their expectations, and estimated that the equipment's useful life would probably be 7 years (in total) instead of 6 years. The estimated salvage value was not changed at that time. However, during 2023 the estimated salvage value was reduced to $5,000.

Question 7: How do Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table.?