Question

On april 1 of the current year, a company purchased and placed in service a machine with a cost of $240,000. the company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000. during the current year, 12,000 units were produced. prepare the necessary december 31 adjusting journal entry to record depreciation for the current year assuming the company uses: a. the straight-line method of depreciation b. the units-of-production method of depreciation c. the double-declining balance method of depreciation

Answer 1

The answers to the questions are:

• a. $33,750
• b. $36000
• c. $90000

a. the straight-line method of depreciation

$\frac{cost of machine - salvage}{useful life} * period$

= (240000 - 60000) / 4 * (9 / 12)

= $33,750

The debit is 33750 as well as the credit

b.  the units-of-production method of depreciation

(240000 - 60000) / 60000 * 12000

= $36000

c. the double-declining balance method of depreciation

(24000 *2 /4) * (9/12)

= $90000

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