Question

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Metlock Industries presents you with the following information.

Complete the table for the year ended December 31, 2022. The company depreciates all assets using the half-year convention.

Description

Date Purchased

Cost

Salvage Value

Life in Years

Depreciation Method

Accumulated Depreciation to 12/31/21

Depreciation for 2022

Machine A

2/12/20

$156,750

$17,600

10

(a)

DDBSLSYD

$36,685

(b)

$

Machine B

8/15/19

(c)

23,100

5

SL

31,900

(d)

Machine C

7/21/18

64,000

23,500

8

DDB

(e)

(f)

Machine D

(g)

10/12/1910/12/2010/12/21

240,900

75,900

5

SYD

77,000

(h)

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Answer 1

a. Cost of machine $156,750 Salvage value is $17,600 $156,750 $17,600 $139,150 Depreciable cost Life of the asset is 10 years Accumulated Depreciation up to Dec 31, 2021 is Calculate Depreciation Sum of Years Digits method (SYD) using half-year convention as shown below Depreciable cost Sum of years digits -x 10 for half-year Half year depreciation for 2020 $139,150 x10 55 $25,300 2. -S12,650 Depreciable cost Sum of years digits x10 for half-year Depreciation upto June 30, 2021 $139,150 x10 55 $25,300 2. $12,650 $139,150 Depreciation upto Dec 31 ,2021=. x9 for half year 55 $22,770 $11,385 Hence, the Accumulated Depreciation up to Dec 31, 2021 - S12,650+S12,650+S11,385 $36,685 Hence, the method is Sum of Years Digits Method (SYD)

b. Depreciation of Machine A for 2022 $139,150 x9 for half year Depreciation upto June30, 2022-2 55 $22,770 2 $11,385 $139,150 Depreciation upto Dec 31,2022=2 x8 for half year 55 $20,240 $10,120 Hence, depreciation of Machine A for 2022 is $11,385+S10,120-$21,505 с. cost of Machine B Purchase date is 15h Aug 2019 Salvage value is $23,100 Life of the asset is 5 years Accumulated depreciation using Straight-line method up to Dec 31, 2021 ie., $31,900 Depreciation $31,900/2.5 years $12,670 Depreciable cost $12,760x5 $63,800 Hence, cost of machine B Depreciable cost + Salvage value -$63,800 + $23,100 -$86,900

d. Calculation of depreciation of Machine B under straight line method for 2022 is as follows: cost- Salvagevalue Life of machine $86,900-$23,100 Depreication of Machine B 5 S12,760 e. Cost of machine is $64,000 Salvage value $23,500 Purchase on 21s July 2018 Life is 8 years Depreciation method DDB Depreciation for the year 2018 (Half year convention) (S64,000/8)x2 for half year $16,000/2-S8,000 Depreciation up to 30 June 2019(S64,000 /8)x2 for half year $16,000/2-$8,000 Depreciation up to 31 De 2019 S64,000-$16,000)/8x 2 S12,000/2 -56,000 Depreciation up to June 30 2020 (S64,000-$16,000)/8- $6,000 Depreciation up to Dec 31 2020 $48,000-$12,000/ 8 $4,500 Depreciation up to Jun 30 2021 $48,000-$12,000/ 8 S4,500 Depreciation up to Dec 31, 2021 S36,000-$9,000/8 S4,000 So, accumulated depreciation s8,000+S8,000+S6,000-S6,000+S4,500 S4,500+S4,000-$41,000