A Machine Was Acquired on January 1, 2021 for $4,000,000

question 75

Essay

A machine was acquired on January 1, 2021 for $4,000,000. At that time it was estimated the machine would last eight years and have a residual value of $560,000. Due to reduced levels of activity during 2023, management revised the estimate of useful life to 10 more years (i.e., the machine was to be operational until December 31, 2032, 12 years in total)and its residual value would be $410,000. The company has a December 31 year-end.
Required:
Case A: Prepare the journal entries to record depreciation for 2021 and 2023. The company uses straight-line depreciation.
Case B: Same as Case A except the company uses the double-declining balance method. The rate used will be 25% for the first two years and then 20% thereafter. Prepare the journal entries to record depreciation for 2021 and 2023.

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Definitions:

Letter Presentation

The act of displaying letters or characters in a particular manner or context, often used in cognitive and perceptual experiments.

Multimodal Perception

The ability to perceive an object or event by more than one sensory system simultaneously.

Sensory System

The Sensory System is the part of the nervous system responsible for processing sensory information, which includes sight, sound, smell, taste, and touch.

Swaddling

The practice of wrapping infants tightly in blankets or cloths to restrict movement and mimic the security of the womb.