Calculate depreciation that should be recorded at year end

Response to the following problem:

Wynne Ltd. purchased a machine on January 1, 2016 for \$23,000. Transportation charges paid by Wynne amounted to \$600 and another \$1,400 cost was incurred for installation. Useful life is three years. The residual value of the machine is \$1,000.

Required:

1. Calculate the amount of the machine on which depreciation will be calculated (that is, the depreciable amount not the carrying amount).

2. In journal entry form, record the depreciation for each year of the expected useful life of the machine under

a. straight-line method

b. double-declining balance method.

Assume that the ½ year rule is not used in the years of acquisition and disposal.

3. On January 1, 2017, Wynne changed the estimated useful life on the machine from a total of three years to a total of five years from the date of purchase. Residual value remains at \$1,000.

Calculate the depreciation that should be recorded in 2017 and each year thereafter assuming the company used the straight-line method.