Question

Short Answer 2012 service a machine wer 2 (10 Points) On April 1 of the current year, a company purchased and placed in machine with a cost of $240,000. The company estimated the machine's useful life to ser vears or 60,000 units of output with an estimated salvage value of $60,000. During the ent year, 12,000 units were produced. Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses: The straight-line method of depreciation 2. The units-of-production method of depreciation . The double-declining-balance method of depreciation

Answer 1

a. Straight line depreciation per year = (240,000 - 60,000) / 4 * 9/12 = 33750

Account Titles	Debit	Credit
Depreciation expense - machinery	33750
Accumulated depreciation - machinery		33750

b. Units of production = (240,000 - 60,000) * (12000/60000) = 36000

Account Titles	Debit	Credit
Depreciation expense - machinery	36000
Accumulated depreciation - machinery		36000

c. Double declining method depreciation rate = 1/4 *2 = 50%

Depreciation for current year = (240,000 ) *50% * 9/12 = 90000

Account Titles	Debit	Credit
Depreciation expense - machinery	90000
Accumulated depreciation - machinery		90000