Jensen Company Purchased a New Machine on October 1, 2014

question 140

Essay

Jensen Company purchased a new machine on October 1, 2014, at a cost of $104,000. The company estimated that the machine has a salvage value of $8,000. The machine is expected to be used for 80,000 working hours during its 8-year life.
Instructions
Compute depreciation using the following methods in the year indicated.
(a) Straight-line for 2014 and 2015, assuming a December 31 year-end.
(b) Declining-balance using double the straight-line rate for 2014 and 2015.
(c) Units-of-activity for 2014, assuming machine usage was 2,900 hours. (Round depreciation per unit to the nearest cent.)

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Definitions:

Magnitude of Consequences

The scale or significance of the outcomes that result from a decision or action.

Ethical Issue

A situation or problem that requires individuals or organizations to choose between alternatives that must be evaluated as right (ethical) or wrong (unethical).

Accruing Benefits

Refers to the gradual accumulation of advantages or positive outcomes over time as a result of certain actions or investments.

Ethical Intensity

Refers to the perceived importance or significance of an ethical issue, including its potential outcomes and the number of people affected.