Question

Problem 9-3A a-b Sheridan Limited purchased a machine on account on April 2, 2018, at an invoice price of $369,950. On April 4, it 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

Answer 1

cost of machine
Invoice price		369950
delivery cost		1900
installation charges		7790
cost of machine		379640
Straight line method		(379640-78470)/5	60234
Year	depreciation cost	depreciation expense	accumulated depreciation	carrying value
2018	379640	40156	40156	339484
2019	379640	60234	100390	279250
2020	379640	60234	160624	219016
2021	379640	60234	220858	158782
2022	379640	60234	281092	98548
2023	379640	20078	301170	78470
Dereciation for 2018		60234*8/12	40156
Double declining method of depreciation
Straight line rate	1/5	0.2
Doubledecling rate	.2*2	40%
Year	opening carrying amount	depreciation expense =openning carrying value*double declining rate	accumulated depreciation = previous year balance+current year depreciation expense	carrying value = openning carrying balance-depreciation expense
2018	379640	101237.3333	101237.3333	278402.6667
2019	278402.6667	111361.0667	212598.4	167041.6
2020	167041.6	66816.64	279415.04	100224.96
2021	100224.96	21754.96	301170	78470
2022
2023
Dereciation for 2018		379640*40%*8/12	101237.3333
Depreciation for 2021		100224.96-78470	21754.96
Units of production method
Per unit of depreciation expense	(379640-78470)/6141	49.04250122
Year	Units of production	depreciation expense = units produced*per unit of depreciation expense	accumulated depreciation	carrying value
2018	900	44138.25	44138.25	335501.75
2019	1537	75378.3225	119516.5725	260123.4275
2020	1495	73318.5375	192835.11	186804.89
2021	1174	57575.895	250411.005	129228.995
2022	1035	50758.9875	301169.9925	78470.0075
total	6141