Question

Mason Brewing sells craft beer and runs a brewery academy offering brewing lessons in
Vancouver. On June 30th, 2018, Mason Brewing purchased a new Copper Kettle to brew
a special new micro-brew.
Mason brewing incurred the following costs:
1) The final invoice price for the copper kettle was $ 35,340
2) Due to it's unusual size, shipping costs of $ 830 were incurred
3) Mason Brewing purchased a one year insurance policy costing $ 2,800 to mitigate risk
4) Mason brewing hired specialists from the supplier to complete installation of the kettle for $ 630
5) To ensure quality from the very first batch, Mason brewing spent $ 1,200 testing the equipment
Mason brewing estimates they can use the new copper kettle for 10 years, at which time they could
probably sell it to a discount brewery for $ 3,000 . They also expect to use the kettle to brew
approximately 900,000 litres of beer.
Required:

Record depreciation at December 31st 2018 AND December 31st, 2019 assuming Mason Brewing uses
the following depreciation methods
A) Straight-line
B) Units of production
- Assume Mason Brewing brews 36,000 litres and 94,500 litres in 2018 and 2019, respectively.
C) Double Declining Balance method

Answer 1

-motions PASE NO.: DATE: anet: Page-1 Cost forming the value of an Invoice price (4) Shipping costs (+) installation Expense (+) Testing Expense $35,340 $830 $ 630 $1, 200 Insurance Capitalized $ 38,000 premium paid should not be and should be charged as an expense useful life = 10 yean. Salvage / resale value = $3,000 Depreciable value = $38,000 - $3,000 = $35, ouo. → Depreciation under straight line method for the year ended 31/12/2018 [01/07/2018 - 31/12/2018 = $35,000 * 6.3 $ 133 1750. 10 12. - Depreciation under straight line method for the year ended 31/12/2019 [01/01/20189 - 31/12/2016] $ 35,000 = $3500

Page 2 of productio produce - Depreciation under units of for the year ended 31/12/2018. = 35.000 x 36,000 9,00,000 $1400 production A Depreciation under units of for the year ended. 31/12/2019 35,000 x94,500 9,00,000 - $3675. > Depreciation under double declining met balance method for the year ended 31/12/2018 - Rate of Depreciation = 1x 100 = 10% - Depreciation = 2x 10tx 35,000 = $ 7000 Restoha amet Value or on laa/2019 = $35.ouo - $7,000 = $28,000. Depreciation under double dedining in balance method for the year ended 34121 s 21/04. X$28,000 31/12/2014 -