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    Use Double-Decling-Balance Method to Depreciate a Machine

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    1. On January 2, 2008, Sahara, Inc. purchased a silkscreen machine for its new clothing line. Sahara incurred the following costs related to the machine:

    Purchase price .............................................................. $120,000
    Freight charges for delivery from manufacturer to Sahara ....... $ 5,000
    Installation costs ............................................................ $ 8,000
    Cost of testing machine to ensure proper installation ......$ 4,000

    This machine is estimated to have a ten (10) year useful life with a salvage value of $18,000. Sahara will use the double-declining-balance (DDB) method to depreciate this machine.

    Part 1: In the space below, calculate and record the depreciation expense on this bottling machine for 2009. Show and label your calculations.

    Date Debit Credit
    1.
    2.
    3.
    4.

    Part 2: Assume it is now August 1, 2010 and Sahara decides to exchange this machine for a newer model. This exchange will cost Sahara a total of $40,000. The fair value of the old machine is $70,000. In the space below, prepare the journal entry to record this exchange. Show and label your calculations.

    Date Debit Credit
    1.
    2.
    3.
    4.
    5.
    6.
    7.

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    https://brainmass.com/business/accounting/use-double-decling-balance-method-depreciate-machine-241263

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    See the attached file.
    1. On January 2, 2008, Sahara, Inc. purchased a silkscreen machine for its new clothing line. Sahara incurred the following costs related to the machine:

    Purchase price .............................................................. $120,000
    Freight charges for delivery from manufacturer to Sahara ............. $ 5,000
    Installation costs ............................................................ $ 8,000
    Cost of testing machine operation to ensure proper installation ........$ 4,000

    This machine is estimated to have a ten (10) year useful life with a salvage value of $18,000. Sahara will use the double-declining-balance (DDB) method to depreciate ...

    Solution Summary

    The solution examines double-declining-balance method to depreciate a machine. The calculations are shown.

    $2.19

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