Question

At the beginning of the year, CCZ Corporation bought three used machines from Pequita Compression Incorporated. The machines immediately were overhauled, installed, and started operating. Because the machines were different from each other, each was recorded separately in the accounts. 29 Machine A $10,000 1,600 600 500 Machine C $22,000 800 Cost of the asset Installation costs Renovation costs prior to use Repairs after production began Machine B $31, 500 2,100 1,400 400 1,600 700 By the end of the first year, each machine had been operating 7,000 hours.

Answer 1

Solution

Transaction	General Journal	Debit	Credit
1	Depreciation expense	$    19,560.00
	Accumulated depreciation-Machine A		$        2,800.00
	Accumulated depreciation-Machine B		$        7,000.00
	Accumulated depreciation-Machine C		$        9,760.00
	(To record depreciation expense)

Working

Straight line Method
A	Cost	$ 12,200
B	Residual Value	$ 1,000
C=A - B	Depreciable base	$ 11,200
D	Life [in years left ]	4
E=C/D	Annual SLM depreciation	$               2,800.00

.

Units of Production method
A	Cost	$ 35,000
B	Residual Value	$ 2,000
C=A - B	Depreciable base	$ 33,000
D	Usage in units(in Hours)	33000
E	Depreciation per hour	$                        1.00

.

Depreciation schedule-Units of Activity
Year	Book Value	Usage	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$                35,000	7000	$                      7,000	$                    28,000	$               7,000

.

Double declining Method
A	Cost	$ 24,400
B	Residual Value	$ 1,400
C=A - B	Depreciable base	$ 23,000
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$ 4,600
F=E/C	SLM Rate	20.00%
G=F x 2	DDB Rate	40.00%

.

Depreciation schedule-Double declining
Year	Beginning Book Value	Depreciation rate	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$ 24,400	40.00%	$ 9,760	$ 9,760	$ 14,640