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Business and Finance homework help

On June 1, a machine costing $660,000 with a 5-year life and an estimated $50,000 salvage value was purchased. It was also estimated that the machine would produce 200,000 units during its life. Actual production would be 40,000 units per year for all five years.

Using the depreciation template provided, determine the amount of depreciation expense for the third year under each of the following assumptions:

The company uses the straight-line method of depreciation.
The company uses the units-of-production method of depreciation.
The company uses the double-declining-balance method of depreciation.
Assuming straight line depreciation, prepare journal entry for the third year.
Assume the company sold the machine at the end of the fourth year for $100,000. Prepare a journal entry for asset disposal in the fourth year.

Assume you are the chief accountant of ABC Inc., a sheetrock manufacturer. Determine how you will choose, based on best industry practices, the depreciation method for ABC Inc. to use.

Your response to Part 4 should be at least one page and must include title and reference pages. In addition, your paper must be formatted according to the CSU-Global Guide to Writing & APA. Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

ACT300 Principles of Accoutning I
Module 6: Critical Thinking Template Option 1 (Depreciation Template)
Straight-Line DepreciationInput amountsRecord journal entry for depreciation expense for the third year:
Cost$0
Salvage value0DebitCredit
Depreciable cost$0Dec. 31Depreciation Expense
Useful life0years      Accumulated Depreciation – Equipment
Useful life in units of production0To record annual depreciation
Record journal entry for asset disposal in the fourth year:
Straight line method
FormulaCost – Salvage Value ** Depreciable cost = Cost – Salvage ValueDebitCredit
Useful life in yearsDec. 31Cash
Accumulated Depreciation
=0Loss on disposal
       Equipment
To record disposal of equipment
Annual depreciation expense=0
Also, compute the straight line depreciation rate.  The formula is 100% divided by the useful life in years
Compute the straight line depreciation rate below:
0%
0
Straight line depreciation rate#DIV/0!
Depreciation for the PeriodEnd of Period
Annual periodDepreciable CostDepreciation rateDepreciation ExpenseAccumulated DepreciationBook Value
*
Year 1
Year 2
Year 3
Year 4
Year 5**
* Cost of machine
** Salvage value is not depreciated

Last Updated on February 11, 2019

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