On 1 Jan 2015, Evers Company Purchased the
following two machines for use in its production process.
The cash price of this machine was $48,000. 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 yeaer of operations.
Evers 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.
The recorded cost of this machine was $180,000. Evers estimates that the useful life of the
machine is 4 yeas with a $10,000 salvage value remaining at the end of that
Prepare the following for Machine A.
The journal entry to record its purchase on 1
The journal entry to record annual depreciation
at 31 Dec ‘15
Calculate the amount of depreciation expense
that Evers should record for Machine B each year of its useful life under the
Evers uses the straight-line method of
Evers uses the declining-balance method. The rate used is twice the straight-line
Evers uses the units-of-activity method and
estimates that the useful life of the machine is 125,000 units. Actual usage is as follows 2105, 45,000
units; 2016, 35,000 units; 2017, 25,000 units; 2018, 20,000 units.
Which method used to calculate depreciation on
Machine B reports the highest amount of depreciation expense in year 1
(2015)? The highest amount in year 4
(2018)? The highest total amount over
the 4-year period?