Question

Question 1 Pharoah Limited purchased a machine on April 2016, at price $56.620. On April 4, 2.130 for every of the $7.910 for installation and using of the machine. The machine was ready for use on April 30 Pharah timate the machine's We will be five years or 6.212 with a red value of $71690. Assume the che produces the 202.11 and 1.113 uns in 2022. Pharoah has a December 11 yewend. 2.0 othe r s. Os g enus ha u ts i 2018. L40 2 0 1. 200 Your is correct. Determine the cost of the machine Cost of the machine 366340 LIETO TEXT LINK TO TORT Your answer is partially correct. Try again. Round answers to decimal place a. 5275) Calculate the annual depreciation and depreciation (1) Straight-line method Year Depreciable Covt Depreciation Expense 1 292.650 the web and your PC His Ne ANG ENGAS

pharaoh limited purchased a machine on account on April 2, 2018, at an invoice price of 356,620 . On April 4, it paid 2130 for delivery of the machine. A one year, 3970 insurance policy on the machine was purchased on April 5. On April 18, pharaoh paid 7590 for installation and testing of the machine. The machine was ready for use on April 30.

pharoah estimates the machines useful life will be five years or 6212 units with a residue all value of 73,690. Assume the machine produces the following numbers of units each year; 896 units in 2018; 1400 units in 2019; 1405 units in 2020; 1396 units in 2021; and 1115 units in 2022. Barrow has a December 31 year end.

calculate the annual depreciation and total depreciation over the assets life using

1)straight line method

2) double diminishing balance method

Answer 1

1. Striaght line Method Depreciation Calculation
Year	Depreciable Cost	Depreciation Expenses	Accumulated Depreciation	Carrying Amount
2018	292650	=292650*(8/12)*(1/5)
		39020	39020	253630
2019	292650	=292650*(1/5)
		58530	97550	195100
2020	292650	=292650*(1/5)
		58530	156080	136570
2021	292650	=292650*(1/5)
		58530	214610	78040
2022	292650	=292650*(1/5)
		58530	273140	19510
2023	292650	=292650*(4/12)*(1/5)
		19510	292650	0
Note1. As the machine was ready to use on 30th April, 2018, therefore depreciation is charged only for 8 months (May'18-Dec'18) for the Calender Year 2018
2. Double Declining Method Depreciation Calculation
Year	Carrying Amount	Depreciation Expenses	Accumulated Depreciation	Carrying Amount
2018	366340	=366340*(8/12)*40%
		97690.67	97690.67	268649.33
2019	268649.33	=268649.33*40%
		107459.73	205150.40	161189.60
2020	161189.60	=161189.60*40%
		64475.84	269626.24	96713.76
2021	96713.76	=96713.76*40% or (96713.76-73690)
		23023.76	292650.00	73690.00
2022	73690.00	0
			292650.00	73690.00
2023	73690.00	0
			292650.00	73690.00
	Double Declining Depreciation Rate = (100%/5)*2 = 40%
Note1. As the machine was ready to use on 30th April, 2018, therefore depreciation is charged only for 8 months (May'18-Dec'18) for the Calender Year 2018
Note2. Depreciation expenses is taken as lower of [(Carrying Amount*Double Declining Depreciation Rate) or (Carrying Amount - Salvage Value)] as last carrying value is equal to Salvage Value.