Exercise 10.3
Kansas Company purchased a machine to use in their business on January 1, 2012 at a cost of $100,000. The machine's estimated useful life was 4 years, and the residual or salvage value is $10,000. It is also estimated that this machine will have a useful life of 45,000 machine hours. Usage of the machine was as follows: 10,000 machine hours in 2012, 8,000 machine hours in 2013, 14,000 machine hours in 2014, and 13,000 machine hours in 2015.
Requirements
1. Prepare a depreciation schedule (with columns headings: Year, Computation, Depreciation Expense, Accumulated Depreciation, and Book Value) for years 2012 through 2015 under each of the following methods:
a. Straight-Line
b. Units-of-Production
c. Double-Declining Balance.
2. For each of the three methods listed in part (a) prepare the December 31, 2012 journal entry to record depreciation. Also, show the balance sheet presentation of the machine at December 31, 2012 under each method.
