Grove Co. acquired a production machine on January 1, 2019, at a cost of $550,000. The machine is expected to have a four-year useful life, with a salvage value of $108,000. The machine is capable of producing 78,000 units of product in its lifetime. Actual production was as follows: 17,160 units in 2019: 24,960 units in 2020; 21,840 units in 2021; 14,040 units in 2022. Following is the comparative balance sheet presentation of the net book value of the production machine at December 31 for each year of the asset's life, using three alternative depreciation methods (items o-c): Required: Identify the depreciation method used for each of the following comparative balance sheet presentations (items a-c). If a declining- balance method is used, be sure to indicate the percentage (150 % or 200%). (Hint: Read the balance sheet from right to left to determine how much has been depreciated each year. Remember that December 31, 2019, is the end of the first year.) a. b. Depreciation Method Production Machine, Net of Accumulated Depreciation At December 31 2021 2020 2022 108,000 108,000 108,000 137,500 187,560 311,320 108,000 218,500 329,000 2019 452,760 275,000 439,500

Grove Co. acquired a production machine on January 1, 2019, at a cost of $550,000. The machine is expected to have a four-year useful life, with a salvage value of $108,000. The machine is capable of producing 78,000 units of product in its lifetime. Actual production was as follows: 17,160 units in 2019: 24,960 units in 2020; 21,840 units in 2021; 14,040 units in 2022. Following is the comparative balance sheet presentation of the net book value of the production machine at December 31 for each year of the asset's life, using three alternative depreciation methods (items o-c): Required: Identify the depreciation method used for each of the following comparative balance sheet presentations (items a-c). If a declining- balance method is used, be sure to indicate the percentage (150 % or 200%). (Hint: Read the balance sheet from right to left to determine how much has been depreciated each year. Remember that December 31, 2019, is the end of the first year.) a. b. Depreciation Method Production Machine, Net of Accumulated Depreciation At December 31 2021 2020 2022 108,000 108,000 108,000 137,500 187,560 311,320 108,000 218,500 329,000 2019 452,760 275,000 439,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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