Question

Practice Assignment Gradebook ORION Downloadable eTextbook Question 1 Sheridan Limited purchased a machine on account on April 2, 2018, at an invoice price of $369,950. On April 4, paid $1,900 for delivery of the machine. A one-year, $3,760 insurance policy on the machine was purchased on April 5. On April 18, Sheridan paid $7,790 for installation and testing of the machine. The machine was ready for use on April 30. Sheridan estimates the machine's useful life will be five years or 6,141 units with a residual value of $78,470. Assume the machine produces the following numbers of units each year: 900 units in 2018; 1,537 units in 2019; 1,495 units in 2020; 1,174 units in 2021; and 1,035 units in 2022. Sheridan has a December 31 year end. Determine the cost of the machine Cost of the machine 379,640 d e decimal lases

Answer 1

Calculate the cost of the machine Particulars Amount invoice price(a) 369950 Delivery charges (b) 1900 installation charges 7790 Cost of machine (d=a+b+c) 379640 Calculate annual depreciation Cost of machine 379640 Salvage value 78470 Amount to be depreciated (379640- 78470) 301170 Machine life 5 years Annual depreciation (301170/5) 60234 1. Straight line depreciation Depreciation Accumulated Carrying Year Depreciable cost expense Depreciation value 2018 301170 40156 40156 339484 20191 339484 60234100390 279250 2020 279250 60234 1 606241 219016 2021 219016 60234 2 20858 158782 20221 1587821 60234 281092) 98548 2023 98548 20078 30117078470 25 Note: 2018 depreciation expense is for 8 months, that is (602348/12)

2. Double declining balance method Deprecation percentage 100%/5 Double declining percentage 2096 40% Year Opening carrying amount 2018 2019 2020 Depreciatio Accumulate Carrying nexpense value 379640 379640 151856 151856 227784 227784 91113.6 242969.6| 136670 136670. 4 54668.16 297637.76 82002.2|| 82002.24 3532.24 30117078470 78470 01 301170178470 20211 20221 20221 3 Units of production method Cost of machine Salvage value Amount to be depreciated Number of units Depreciation per unit 379640 78470 301170 16141units 49.04 1 47 year units of production 48 2018 49 2019 50 2020 51 2021 2022 53 Depreciatio Accumulate Carrying nexpense value 900 44138.2511 44138.2511 335502 153775378.3244 119516.575 260123 1495 73318.5393) 192835.115| 186805 1174 57575.8964250411.011 129229! 1035 50758.9888 3011701 784707 6141 301170

Formula and calculations

E Calculate the cost of the machine 800 OU AUN Particulars invoice price(a) Delivery charges (b) installation charges © Cost of machine (d=a+b+c) Amount 369950 1900 7790 -SUM(C5:07) Calculate annual depreciation Cost of machine Salvage value =C8 78470 Amount to be depreciated(379640-78470) Machine life Annual depreciation (301170/5) |=C11-C12 5 years -C13/5 1. Straight line depreciation 18 Year 2018 20 2019 21 2020 22 2021 23 2022 24 2023 Depreciable cost =c13 =E19 =E20 =F21 -E22 =E23 Depreciation expense C15*8/12 -C$15 =C$15 = $15 Accumulated Depreciation =C19 =D19+C20 =D20+C21 =D21+C22 =D22+C23 =D23+C24 Carrying value =C11-C19 =E19-C20 =E20-C21 =E21-C22 =E22-C23 =E23-C24 -C$15 = 15*4/12

2. Double declining balance method Deprecaition percentage 10096/5 Double declining percentage =100%/5 =C292 Opening carrying amount Depreciation expense 32 Year 33 2018 34 2019 35 2020 36 2021 37 2022 38 2023 =E33 =F24 =E35 =E36 =C12 =B34*C$30 =B35*C$30 =B36°C$30 =B37-338 Accumulated Depreciation Carrying value =C11 =C34 =E33-C34 =D34+C35 =E34-C35 =D35+C36 =E35-C36 301170 =E36-C37 =D37+038 =E37-C38 Units of production method Cost of machine Salvage value Amount to be depreciated Number of units Depreciation per unit 379640 78470 =C41-C42 6141units =C43/6141 47 year 48 2018 49 2019 50 2020 51 2021 52 2022 units of production 900 1537 1495 1174 1025 =SUM(B48:B52) Depreciation expense =B48*C$45 =B49.C$45 I=B50*C$45 I=B51*c$45 =B52*c$45 =B53*c$45 Accumulated Depreciation Carrying value =C48 =C41-C48 =D48+049 1=E48-C49 I=D49+ C50 T =E49-C50 =D50+C51 I=E50-C51 =D51+C52 =E51-C52