Question

Question 1: Company Minisun is a large air-condition manufacturer. On January 1st, 2013 the company buys a new machine. The cost of the machine totals to $40,000. Cost of delivery: $10,000. Salvage value is 0. The company uses the units of production method to calculate the annual depreciation expense. The machine is expected to manufacture a total of 150,000 units of air-conditions. At 2013 the company produced 31,000 units. At 2014 the company produced 12,000 units. At 2015 the company produced 8,000 units. After 3 years the company decides to sell the machine, the price received for it is $30,000. Required a. Calculate the Depreciation expense, Accumulated depreciation and Machine, net, for the machine for the first 3 years of its operation. 2013 2014 2015 Depreciation expense Accumulated depreciation Machine, net b. Calculate the gain/loss from the sale of the machine.

ONLY ANSWER USING EXCEL OR WORD - NO WORK WRITTEN ON PAPER SHOW ALL WORK STEP BY STEP.

THANKS

Answer 1

	Rate of depreciation per unit of production = (40000+10000-0)/150000 =	$                0.33
a]		2013	2014	2015
	Depreciation expense	$           10,230	$                3,960	$              2,640
		[31000*0.33]	[12000*0.33]	[8000*0.33]
	Accumulated depreciation	$           10,230	$              14,190	$            16,830
			[10230+3960]	[14190+2640]
	Machine, net	$           39,770	$              35,810	$            33,170
		[50000-10230]	[50000-14190]	[50000-16830]
	Note:
	Cost of machine = 40000+10000 =	$           50,000
b]	Loss from sale = 30000 - Machine net at end of 2015 = 30000-3170 =	$            -3,170