Prepare journal entries to record the initial purchase

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Purchase of a new Rover machine for $1,500,000. The Rover is expected to have a useful life of 10 years and a physical life of 25 years. Furthermore, the Rover's residual value is expected to be $nil, and its salvage value is expected to be $5,000 at the end of 25 years. The Rover is expected to help Moon Inc. generate significantly more revenue in the first few years of operation and will contribute much less to revenue generation toward the end.

Problem 1: Based on information above, which depreciation method should Moon Inc. use and why

Problem 2: Based on the information above, prepare journal entries to record the initial purchase of the Rover machine (January 1, 2020), and depreciation for fiscal years 2020 and 2021.

Reference no: EM132739588

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