Question

Schrade Company bought a machine for $98,000 cash. The estimated useful life was four years, and the estimated residual value was $6,040. Assume that the estimated useful life in productive units is 121,000. Units actually produced were 44,000 in year 1 and 46,000 in year 2 value: Required information 10.00 points Required: 1. Determine the appropriate amounts to complete the following schedule. (Round your answers to the nearest dollar amount. Do not round intermediate calculations.) Depreciation Expense for Year 1 Year 2 Net Book Value at the End of Year 1 Year 2 Method of Depreciation Straight-line Units-of-production Double-declining-balance 4. Indicate the effects of (a) acquiring the machine and (b) recording annual depreciation on the operating and investing activities sections of the statement of cash flows (indirect method) for year 1 (assume the straight-line method). (a) The machine acquisition would cash provided by cost of activities by the the cash provided by (b) The depreciation cost would activity by

Answer 1

Straight Line
Date	Cost of asset	Depreciable cost	Depreciation rate	Depreciation expenses	Accumulated Depreciation	Book value
Year 1	$98,000	$91,960	25%	$22,990	$22,990	$75,010
Year 2	$98,000	$91,960	25%	$22,990	$45,980	$52,020
Units of production
Date	Depreciable cost	Depreciation per unit	No. of units	Depreciation expenses	Accumulated Depreciation	Book value
Year 1	$91,960	$0.76	44000	$33,440	$33,440	$64,560
Year 2	$91,960	$0.76	46000	$34,960	$68,400	$29,600
Double Declining balance
Date	Cost of asset	Book Value	DDB Rate	Depreciation expenses	Accumulated Depreciation	Book value
Year 1	$98,000	$98,000	50.00%	$49,000	$49,000	$49,000
Year 2	$98,000	$49,000	50.00%	$24,500	$73,500	$24,500
		Depreciatioin expenses for		Net Book value for
	Method of Depreciation	Year 1	Year 2	Year 1	Year 2
	Straight-Line	$22,990	$22,990	$75,010	$52,020
	Units of Production	$33,440	$34,960	$64,560	$29,600
	Double Declining balance	$49,000	$24,500	$49,000	$24,500
	a.The machine acquistion would decrease the cash provided by Investing activities by the amount of $98,000 for cost of machine
	b.The depreciation cost would be added to the amopunt of Depreciatioin expenses in Cash Flow from Operating activities