Reference no: EM132547243

Question - Dale Cooper began business on 1 January 20X1, with a 31 December balance date. All figures are GST-exclusive.

On that day he purchased a new factory machine for making dog food for $48,000 from Wind River Ltd.

Freight of $600 and installation expenses of $400 were paid to get the machine into Dale's factory and ready for use.

Dale had to employ a repairman to get the machine operating correctly, as it was found to have been dropped accidentally by one of his employees on delivery, and needed a few things fixing and replaced as a result. The repairs and parts replaced cost $1,000.

The machinery has an estimated life of 25,000 hours.

The hours the machinery is estimated to be used annually are:

Year 1 2,000 hours

Year 2 3,000 hours

Year 3 4,000 hours

Year 4 5,000 hours

Year 5 4,500 hours

Dale also had a Nissan Maxima turbo vehicle, which he decided to register as a business vehicle, at a cost of $35,000 on 1 January 20X1.

Suppose Dale had the option of choosing the diminishing value method for the machinery depreciation at a rate of 20%, or straight line depreciation with an estimated residual value of $5,000 and a useful life of 10 years. Recalculate annual depreciation for years 20X1-20X5, and the accumulated depreciation as at the end of year 31/12/20X5.