Q1) Capital Company bought 3 machines in past year. Information regarding these items is given below:
Machine Acquired Cost Salvage Value Useful life Depreciation Method
1 Jan 1, 2006 $120,000 $20,000 5 years Straight-line
2 Jan 1, 2006 80,000 10,000 5 years Double-declining
3 Sept 1, 2006 530,000 5,000 4 years Units of production
Information: Total machine hours expected for machine 3 will be 12,000 hours. Actual machine hours used in first three years were: 200 hours in 2006, 2,250 hours in 2007, and 2,500 hours in 2008:
i) The Straight-line depriciation method.
ii) The Double-declining depriciation method.