Chapter 9, Problem 9.3AP

(a)(1)

To determine

Depreciation: Depreciation refers to the reduced value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

To prepare: Journal entry to record the purchase of Machine A of Company E.

(2)

To determine

To prepare: Journal entry to record the annual depreciation of Company E.

(b)(1)

To determine

To calculate: the amount of depreciation expense of Machine B under straight line method of depreciation.

(2)

To determine

To calculate: the amount of depreciation expense under declining balance method of depreciation.

(3)

To determine

To calculate: the amount of depreciation expense under units-of-activity method of depreciation.

(c)

To determine

To explain: the method which reports the highest amount of depreciation in year 2015, 2018 and total amount over 4-year period.