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Fast Limited purchased a machine on 1 April 2015 at a cost of $140,000 with a residual value of $8,000. The estimated useful life of this machine was ten years. The estimated operation output was 50,000 hours. Compute the depreciation expense of the machine at the year-end on 31 December for 2015 and 2016 by using the methods below (show your workings): (i) Straight-line (with depreciation calculated to the nearest whole month), (ii) 200%-declining-balance (with half-year convention), (ii) Unit-of-output (5,000 hours in 2015; 5,500 hours in 2016). i) Straight-line ii) 200% declining- balance Method (iii) Units-of-output Method Depreciation expense Depreciation expense Depreciation Method Year ex 2015 2016 Part II (6 marks) On 31st March 2017, Fast Limited sold the truck for $1,600,000 cash. The truck was purchased in April 2014 for $3,300,000 with an estimated useful of 5 years and a residual value $300,000. The company uses straight-line depreciation method with half- year convention and usually updates the depreciation expense annually. Prepare the following journal entries (show your workings): (a) to update the depreciation expenses in 2017. (b) to dispose of the truck (2 marks) (4 marks) Part III (6 marks) What is the acquisition cost of the machinery (show your workings) based on the Following information: Set-up fee Usual maintenance fee $700 $200 Transportation-out fee when dispose Invoice price Trade discount received Import tax Freight-in charge Cost of repair after installation $400 $200,000 5% of invoice price 4% of invoice price S1,500 $1,200

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