Wynne Ltd. purchased a machine on January 1, 2016 for $23,000. Transportation charges paid by Wynne amounted to $600 and another $1,400 cost was incurred for installation. Useful life is three years. The residual value of the machine is $1,000.
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Required: |
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1. |
Calculate the amount of the machine on which depreciation will be calculated (that is, the depreciable amount not the carrying amount). |
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2. |
In journal entry form, record the depreciation for each year of the expected useful life of the machine under a. straight-line method b. double-declining balance method Assume that the ½ year rule is not used in the years of acquisition and disposal. |
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3. |
On January 1, 2017, Wynne changed the estimated useful life on the machine from a total of three years to a total of five years from the date of purchase. Residual value remains at $1,000. Calculate the depreciation that should be recorded in 2017 and each year thereafter assuming the company used the straight-line method. |
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