Millco, Inc., acquired a machine that cost $600,000 early in 2016. The machine is expected to...

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Accounting

Millco, Inc., acquired a machine that cost $600,000 early in2016. The machine is expected to last for eighth years, and itsestimated salvage value at the end of its life is $80,000.
Required:
a. Using straight-line depreciation, calculate thedepreciation expense to be recognized in the first year of themachine's life and calculate the accumulated depreciation after thefifth year of the machine's life.

b. Using declining-balance depreciation at twice thestraight-line rate, calculate the depreciation expense for thethird year of the machine's life.

c. What will be the net book value of the machine at the endof its eighth year of use before it is disposed of, under eachdepreciation method?

Answer & Explanation Solved by verified expert

4.3 Ratings (738 Votes)

Working note no 1 for Straight Line Depreciation A Cost 60000000 B Residual Value 8000000 CA B Depreciable base 52000000 D Life in years 8 ECD Annual SLM depreciation 6500000 Year Book Value Depreciation expense Ending Book Value Accumulated Depreciation 1 60000000 6500000 53500000 6500000 2 53500000 6500000 47000000 13000000 3 47000000 6500000 40500000 19500000 4 40500000 6500000 34000000 26000000 5 34000000 See Answer

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Transcribed Image Text

Millco, Inc., acquired a machine that cost $600,000 early in2016. The machine is expected to last for eighth years, and itsestimated salvage value at the end of its life is $80,000.Required:a. Using straight-line depreciation, calculate thedepreciation expense to be recognized in the first year of themachine's life and calculate the accumulated depreciation after thefifth year of the machine's life.b. Using declining-balance depreciation at twice thestraight-line rate, calculate the depreciation expense for thethird year of the machine's life.c. What will be the net book value of the machine at the endof its eighth year of use before it is disposed of, under eachdepreciation method?