In recent years, Kannada Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and each selected a different method. Information concerning the machines is summarized below.
|
Salvage |
Useful Life |
Depreciation |
|||
|
Machine |
Acquired |
Cost |
Value |
in Years |
Method |
|
1 |
1/1/09 |
$105,000 |
$ 5,000 |
10 |
Straight line |
|
2 |
1/1/10 |
150,000 |
10,000 |
8 |
Declining balance |
|
3 |
11/1/12 |
100,000 |
15,000 |
6 |
Units of activity |
For the declining balance method, the company uses the double declining rate. For the units of activity method, total machine hours are expected to be 25,000. Actual hours of use in the first 3 years were: 2012, 2,000; 2013, 4,500; and 2014, 5,500.
Instructions
(a) Compute the amount of accumulated depreciation on each machine at December 31, 2012.
(b) If machine 2 had been purchased on May 1 instead of January 1, what would be the depreciation expense for this machine in (1) 2010 and (2) 2011?