The following information relates to Hawkrigg Corporation’s purchase of equipment on 15 June 20X7: Invoice price ........................

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Accounting

The following information relates to Hawkrigg Corporation’spurchase of equipment on 15 June 20X7: Invoice price..................... $ 210,000 Discount for early payment (if paidby 30 June)....... $ 1,050 Shipping costs..................... $2,000 Installation ...................... $ 1,500 Testing........................ $ 3,000 The equipment was installed andtested during the week of 22 June 20X7. Hawkrigg paid the invoiceprice on 1 July 20X7. The equipment was ready for use on 30 Juneand put into production on 3 July 20X7. Hawkrigg management usesstraight- line depreciation for the company’s equipment and expectsto use the asset for six years. he estimated residual value iszero. Their fiscal year end is 31 December. Required: 1. What isthe book value of the equipment after installation? 2. Computedepreciation expense for 20X7, using the straight- line method,under each of the following assumptions: a. Exact, to the closestmonth b. Full first- year convention c. Half- year convention 3.Calculate depreciation expense for both 20X7 and 20X8 under each ofthe methods in requirement (2), using double- declining balance (DDB) depreciation.

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1 Book Value of Machinery after Installation Any expenses incurred for bringing the asset to its current location should also be capitalised In this case the book value of the asset will be See Answer

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