Cost of Asset and Depreciation Method The Heist Company purchased a machine on January 2, 2007 and uses the 150% declining balance depreciation method. The machine has an expected life of 10 years and an expected residual value of $5,000. The following costs relate to the acquisition and use of the machine during the first year of its operations:
|
Invoice price |
$50,000 |
|
Discounts available and taken |
1,000 |
|
Freight |
700 |
|
Installation |
900 |
|
Testing |
$1,100 |
|
Normal spoilage of materials during the year |
750 |
|
Abnormal spoilage of materials during the year |
250 |
|
Wages of machine operator |
15,000 |
Required
Compute the depreciation expense for 2007 and 2008.