Question 1covey company purchased a machine on january 1

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Reference no: EM13377577

Question 1:

Covey Company purchased a machine on January 1, 2008, by paying cash of $250,000. The machine has an estimated useful life of five years (or the production of 500,000 units) and an estimated residual value of $25,000. Required: A. Determine depreciation expense (to the nearest dollar) and book value for each year of the machine's useful life under (1.) straight-line depreciation; and (2.) the 200% declining balance method. B. If the machine was used to produce and sell 120,000 units in 2008, what would the depreciation expense be under the units of production method?

Question 2:

A company purchased equipment for $800,000 and has depreciated it using the straight-line method for the past 5 years when its original life was estimated to be 10 years with a $200,000 residual value. The equipment's utility to the company has declined because they expect it to generate a net cash flow over the remaining years of $200,000 from its operation. If the asset has been impaired, record the journal entry to recognize the loss.

Reference no: EM13377577

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