Question

In recent years, Sandhill Corporation has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Residual Value Useful Life (in years) Depreciation Method 1 Jan. 1, 2018 $104,000 $12,600 5 Straight-line 2 July 1, 2019 91,250 9,150 5 Diminishing-balance 3 Nov. 1, 2019 56,434 6,570 6 Units-of-production For the diminishing-balance method, Sandhill Corporation uses double the straight-line rate. For the units-of-production method, total machine hours are expected to be 21,680. Actual hours of use in the first 3 years were: 2019, 420; 2020, 4,110; and 2021, 5,390.

Prepare separate depreciation schedules for each machine. Prepare the schedule for all years, information permitting. (Round depreciation per unit to 2 decimal places, e.g. 5.20 and answers to the nearest whole dollar, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.) Machine 1: Straight-line depreciation Calculation End of Year Year Depreciable Cost Depreciation Rate # of months Depreciation Expense Accumulated Depreciation Carrying Amount 2018 $ % 6/129/123/1212/12 $ $ $ 2019 % 3/129/126/1212/12 2020 % 6/129/123/1212/12 2021 % 12/123/129/126/12 2022 % 6/129/1212/123/12

Answer 1

Machine 1-Straight Line
Date	Cost of asset	Depreciable cost	Depreciation rate	Depreciation expenses	Accumulated Depreciation	Book value
2018	$1,04,000	$91,400	20%	$18,280	$18,280	$85,720
2019	$1,04,000	$91,400	20%	$18,280	$36,560	$67,440
2020	$1,04,000	$91,400	20%	$18,280	$54,840	$49,160
2021	$1,04,000	$91,400	20%	$18,280	$73,120	$30,880
2022	$1,04,000	$91,400	20%	$18,280	$91,400	$12,600
Machine 2-Double Declining balance
Date	Cost of asset	Book Value	DDB Rate	Depreciation expenses	Accumulated Depreciation	Book value
2019-6 months	$91,250	$91,250	20.00%	$18,250	$18,250	$73,000
2020	$91,250	$73,000	40.00%	$29,200	$47,450	$43,800
2021	$91,250	$43,800	40.00%	$17,520	$64,970	$26,280
2022	$91,250	$26,280	40.00%	$10,512	$75,482	$15,768
2023	$91,250	$15,768	20.00%	$3,154	$78,636	$12,614
2024-6 months
Machine 3-Units of production
Date	Depreciable cost	Depreciation per unit	No. of units	Depreciation expenses	Accumulated Depreciation	Book value
2019	$49,864	$2.30	420	$966	$966	$55,468
2020	$49,864	$1.25	4110	$5,138	$5,138	$51,297
2021	$49,864	$1.25	5390	$6,738	$11,875	$44,559