Accounting Exercise 8.1 (Accounting for Long-term Assets)
Provided below is information available for Masters Factory that acquired new equipment on January 1, 20X8:
| Purchase price | $12,000 |
| Delivery cost | $1,000 |
| Estimated useful life | 3 years |
| Estimated number of units: In year 1 In year 2 In year 3 |
30,000 |
| Salvage value | $4,000 |
Required:
a) Apply four depreciation methods below to determine depreciation expense
for the equipment for three years:
- straight-line method;
- double-declining balance method;
- units-of-production method;
- sum-of-year-digits depreciation method.
b) Prepare journal entries for the double-declining method, provided the
company sold the equipment at the end of 20X0 for $3,000.
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