Moorpark Inc. purchases a machine on January 31, 2014 and puts it into use immediately.The machine cost $28,000 and has a salvage value of $4,000.It has a 4-year useful life.The company’s fiscal year ends on December 31.
a) Calculate the carrying value of the machine on December 31, 2015 under each of the following methods:
i. Straight-line
ii. Double-declining balance
iii. Sum-of-the-years’ digits.
b) Prepare the journal entry on March 31, 2016 when the machine is sold for $4,000 under each of the following methods:
i. Straight-line
ii. Double-declining balance
iii. Sum-of-the-years’ digits.
c) Prepare the journal entry on March 31, 2016 when the machine is sold for $12,000 under each of the following methods:
i. Straight-line
ii. Double-declining balance
iii. Sum-of-the-years’ digits.