Record the journal entry for cash purchase of the machine

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Moonshine Corporation purchased a new machine on Jan 4, 2019 for $205,000 cash. The machine has a useful life of five years or of 30,000 hours. After the useful life the machine will have a residual value of $2,000. The machine was used for 4,200 hours in 2019 and 5,600 hours in 2020.

Required:

Problem a. Calculate the depreciation expense for 2019 and 2020 under each of the following methods:

i. Straight-line
ii. Double diminishing-balance
iii. Units-of -production

Problem b. Calculate the carrying amount at the end of 2020 for the machine when the company is using the Straight-line depreciation method.

Problem c. Record the journal entry for the cash purchase of the machine on Jan 4, 2019 and for its depreciation expense for the year ended December 31, 2020 under the units-of-production method.

Reference no: EM132813785

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