Problem:
In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.
|
Machine
|
|
Acquired
|
|
Cost
|
|
Salvage
Value
|
|
Useful Life
(in years)
|
|
Depreciation
Method
|
|
1
|
|
Jan. 1, 2012
|
|
$136,000
|
|
$27,000
|
|
10
|
|
Straight-line
|
|
2
|
|
July 1, 2013
|
|
87,000
|
|
11,800
|
|
5
|
|
Declining-balance
|
|
3
|
|
Nov. 1, 2013
|
|
91,520
|
|
7,820
|
|
6
|
|
Units-of-activity
|
For the declining-balance method, Farr Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 31,000. Actual hours of use in the first 3 years were: 2013, 900; 2014, 3,650; and 2015, 5,060.
Compute the amount of accumulated depreciation on each machine at December 31, 2015.
If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2013? In 2014?