Peanut Company Purchased a Machine on January 1, 2016, for $100,000

question 74

Essay

Peanut Company purchased a machine on January 1, 2016, for $100,000 with a $20,000 salvage value and an eight- year useful life. The company uses double-declining-balance depreciation.
Required:
Compute the depreciation expense to the nearest whole dollar) for 2016 and 2017.

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Definitions:

Fair Value Method

An accounting approach that estimates the price to sell an asset or settle a liability, based on current market conditions.

Short-term Investments

Investments that are easily convertible into cash, typically within five years or less, used to generate income on surplus funds.

Recognition

The formal acknowledgment in accounting that a transaction or event has occurred and should be recorded in the financial statements.

Government Bonds

Debt securities issued by a government to support government spending and obligations, often seen as low-risk investments.