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On January 1 of the current? year, Reynoso Manufacturing Company purchased a metal cutting and polishing...

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Accounting

On January 1 of the current? year, Reynoso Manufacturing Companypurchased a metal cutting and polishing machine at a cost of$3,880,000. The installation and delivery costs amounted to$220,000. The firm expects the machine to be productive for a totalof five years and expects a residual value of $420,000 at the endof the?asset's useful life.

Requirements:

Prepare the depreciation schedules for the machine assuming thatthe following methods were used? (each case is? independent):

1.

?Straight-line method

2.

?Double-declining balance method? (DDB) (Reduce the depreciationexpense in the last year to the necessary amount to arrive at anending book value equal to the scrap? value.)

Answer & Explanation Solved by verified expert
4.3 Ratings (897 Votes)
CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR MACHINE Purchase Cost of Machine 3880000 Add Installation and Delivery Cost 220000 Depreciated Value 4100000 Less Salvage Value 420000 Net Value for Depreciation 3680000 Usefule life of the Assets 5 years Depreciation per year Value for Depreciation 5 years 736000 Total Depreciation for the per year 736000    See Answer
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Transcribed Image Text

On January 1 of the current? year, Reynoso Manufacturing Companypurchased a metal cutting and polishing machine at a cost of$3,880,000. The installation and delivery costs amounted to$220,000. The firm expects the machine to be productive for a totalof five years and expects a residual value of $420,000 at the endof the?asset's useful life.Requirements:Prepare the depreciation schedules for the machine assuming thatthe following methods were used? (each case is? independent):1.?Straight-line method2.?Double-declining balance method? (DDB) (Reduce the depreciationexpense in the last year to the necessary amount to arrive at anending book value equal to the scrap? value.)

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