Company A, Company B and Company C had purchased the same piece of machinery 2 years ago at the beginning of 2022. The machinery was originally purchased for $96,000 and had a residual value of $5,000. At the time of purchase the estimated useful life of the asset was 4 years or the equivalent useful life in units-of-production equal to 18,200 units. At the beginning of 2024, it was determined that the total useful life of the asset was 6 years rather than 4 years originally expected or the equivalent total units-of- production of 32,200 units. In addition, to the extended useful life of the machinery, the revised residual value is estimated at $1,800. The actual number of units produced in the first two years was 6,100 units per year. The actual production for 2024 was 7,400 units. Each of the companies uses a different method of depreciation with Company A using the straight-line method of depreciation, Company B uses the units-of-production method with a per unit depreciation charge rounded to the nearest cent and Company C uses the double diminishing-balance method.

Company A, Company B and Company C had purchased the same piece of machinery 2 years ago at the beginning of 2022. The machinery was originally purchased for $96,000 and had a residual value of $5,000. At the time of purchase the estimated useful life of the asset was 4 years or the equivalent useful life in units-of-production equal to 18,200 units. At the beginning of 2024, it was determined that the total useful life of the asset was 6 years rather than 4 years originally expected or the equivalent total units-of- production of 32,200 units. In addition, to the extended useful life of the machinery, the revised residual value is estimated at $1,800. The actual number of units produced in the first two years was 6,100 units per year. The actual production for 2024 was 7,400 units. Each of the companies uses a different method of depreciation with Company A using the straight-line method of depreciation, Company B uses the units-of-production method with a per unit depreciation charge rounded to the nearest cent and Company C uses the double diminishing-balance method.

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 10E: Hathaway Company purchased a copying machine for 8,700 on October 1, 2019. The machines residual...

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