Question

In recent years, Sheridan Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Useful Life (in years) Depreciation Method Machine Salvage Acquired Cost Value Jan. 1, 2015 $133,000 $45,000 July 1, 2016 86,500 10,500 Nov. 1, 2016 68,2008,200 8 Straight-line Declining-balance Units-of-activity For the declining-balance method, Sheridan Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 30,000. Actual hours of use in the first 3 years were: 2016,620; 2017,5,300; and 2018, 6,900. Compute the amount of accumulated depreciation on each machine at December 31, 2018. MACHINE 1 MACHINE 2 MACHINE 3 Accumulated Depreciation at December 31 $ 33000 $ e Textbook and Media If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2016? In 2017? 2016 2017 Depreciation Expense $

Answer 1

Machine 1
(133000-45000)/8
11000
Accumulated depreciation from jan 1,2015 to dec 31,2018
11000*4
44000
Machine 2
double declining rate
1/5*2
40%
july 1,2016 to dec 31,2016			86500*40%*6/12=			17300
jan 1,2017   to dec 31,2017			(86500-17300)*40%=			27680
jan 1,2018 to dec 31,2018			(86500-17300-27680)*40%=			16608
Accumulated depreciation						61588
Machine 3
units of activity rate
(68200-8200)/30000
2	per hour
Accumulated dep		(620+5300+6900)*2
		25640
				Machine 1	machine 2	machine 3
Accumulated depreciation				44000	61588	25640
				2016	2017
Depreciation expense				25950	24220