Reference no: EM13508243
On January 1, 2014, Thao Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $35,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Thao estimates that the useful life of the machine is 5 years with a $5,000 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 $80,000. Thao estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Instructions
(a) Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2014.
(2) The journal entry to record annual depreciation at December 31, 2014.
(b) Calculate the amount of depreciation expense that Thao should record for Machine B each year of its useful life under the following assumptions. (Round answers to 0 decimal places, e.g. $2,125. Round cost per unit to 2 decimal place, e.g. 1.25.)
(1) Thao uses the straight-line method of depreciation.
(2) Thao uses the declining-balance method. The rate used is twice the straight-line rate.
(3) Thao uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2014, 42,000 units; 2015, 35,000 units; 2016, 28,000 units; 2017, 20,000 units.
(c) Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2014)? The highest amount in year 4 (2017)? The highest total amount over the 4-year period?
|
Calculate natural resource accounting
: During the first year, McCabe removed 90,000 barrels of oil, which it sold on account for $39 per barrel. Operating expenses totaled $850,000, all paid in cash.
|
|
Why are the data that jack has gathered qualitative
: Why are the data that Jack has gathered qualitative in nature and describe the steps in qualitative data analysis (data reduction, data display, and the drawing of conclusions) on the basis of Jack's study
|
|
By what angle do polarizing directions of two sheets differ
: A beam of polarized light is incident upon the first of two polarizing sheets with its polarization direction making an angle of 45° with respect to the polarizing direction of the first sheet. By what angle do the polarizing directions of the two ..
|
|
Critical health care research issues
: What are the 10 Most Important or Critical Health Care Research Issues for Health Services Research in 2012 or 2013?
|
|
Which method used to calculate depreciation on machine b
: Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2014)? The highest amount in year 4 (2017)? The highest total amount over the 4-year period?
|
|
Evaluate the intensity of the wave
: Radio waves of frequency 1.1 x 10^10 Hz are emitted from a radar antenna travelling in an eastward direction. If the amplitude of the electric field component is 1.2 V/m, calculate the intensity of the wave
|
|
Relationship between the economy and other institutions
: Contrast how Karl Marx and Max Weber theorized the relationship between the economy and other institutions (e.g., politics or religion). Support your discussion with examples
|
|
Find the frictional force acting on the car
: A car of mass 961 kg coasts on a level road, starting with an initial speed of 14.6 m/s and coming to rest 15.4 s later. Find the frictional force acting on the car
|
|
What is the velocity of the ice skater
: A 62.9 kg ice skater moving to the right with a velocity of 2.07 m/s throws a 0.193 kg snow- ball to the right with a velocity of 31.6 m/s relative to the ground. What is the velocity of the ice skater
|