Question

Blossom Industries presents you with the following information. Complete the table for the year ended December 31, 2022. The company depreciates all assets using the half-year convention. (Round answers to o decimal places, e.g. 45,892.) Date Purchased 2/12/20 Life in Years Salvage Value $20,200 Depreciation Method Depreciation for 2022 Description Machine A Cost Accumulated Depreciation to 12/31/21 $40,890 (b) 35,670 (d) $175,300 (a) Machine B Machine C Machine D 8/15/19 7/21/18 76,800 269,370 25,830 23,5008 84,870 DDB (e) SYD (9) 5 86,100 (h)

Answer 1

(a)	Determination of depreciation method
	Cost of machine A	=	$175300
	Date of purchase	=	12-Feb-20
	Salvage value		$20200
	Depreciable cost	=	$175300-$20200	=	$155100
	Accumulated Depreciation upto 31 dec,2021( for one and half year)	=	$40890
	Depreciation under the sum of year digit method		(Remaining useful life of assest/sum of years digit)*depreciable cost
	Depreciation of machine A under SYD method using half year convention
	Half year depreciation on machine A for 2020	=	($155100/55)*10	for half year=28200/2=14100
	Depreciation upto 30june 2021	=	($155100/55)*10	for half year=28200/2=14100
	Depreciation upto 31 dec 2021	=	($155100/55)*9	for half year=25380/2=12690
	Accumulated Depreciation upto 31 dec of machine A		14100+14100+12690		=	$40890
	Answer is sum of years digit method
	note=10+9+8+7+6+5+4+3+2+1=55

(b)	calculation of depreciation of 2022 for machine A
	Depreciation upto 30 june 2022	=	($155100/55)*9
	Depreciation upto 31 dec 2022	=	($155100/55)*8
	Depreciation	=	12690+11280
		=	$23970

(c)	calculation of cost of machine B
	date of purchase	=	15-Aug-19
	salvage value	=	$25830
	Accumulated depreciation under straight line method upto 31 dec 2021 for 2 and half years)	=	$35670
	Annual depreciation	=	$35670/2.5	$14268
	Life of machinary	=	5 years
	Depreciable cost of machine	=	$14268*5	$71340
	cost of machine B	=	depreciable cost+ salvage value
			$71340+$25830
			$97170

(d)	calculation of depreciation of machine B for 2022
	depreciation	=	(97170-25830)/5
		=	$14268

(e)	calculation of accumulated depreciation of machine C upto 31 dec 2021 under double declining balance method
	cost of machine	=	$76800
	salvage value	=	$23500
	date of purchase	=	21-Jul-18
	life of machine	=	8 years
	depreciation for the year 2018 using half year convention	=	(76800/8)*2 for half year=19200/2= $9600
	depreciation upto 30 june 2019	=	(76800/8)*2 for half year=19200/2= $9600
	depreciation upto 31 dec 2019	=	((76800-19200)/8)*2 for half year=14400/2= $7200
	depreciation upto 30 june 2020	=	((76800-19200)/8)*2 for half year=14400/2= $7200
	depreciation upto 31 dec 2020	=	((57600-14400)/8)*2 for half year=10800/2=5400
	depreciation upto 30 june 2021	=	((57600-14400)/8)*2 for half year=10800/2=5400
	depreciation upto 31 dec 2021	=	((43200-10800)/8*2) for half year=8100/2= $4050
	Accumulated depreciation	=	9600+9600+7200+7200+5400+5400+4050
		=	$48450

(f)	calculation of depreciation of machine C
	cost of machine C as on 1 jan 2020 after deducting deprecation	=	$76800-$48450
		=	$28350
	salvage value	=	$23500
	hence depreciation	=	$28350-$23500
			$4850

(g)	determine the date of purchase of machine D
	Cost of machine D	=	$269370
	Salvage value	=	$84870
	Life of machine	=	5 years
	Accumulated Depreciation upto 31 dec 2021	=	$86100
	Depreciation method	=	sum of year digit method
	depreciable cost	=	$269370-$84870 =	$184500
	depreciation for the first half year should be	=	(184500/15)*5 for half year=61500/2= $30750
	depreciation for the second half year should be	=	(184500/15)*5 for half year=61500/2= $30750
	depreciation for the third half year should be	=	(184500/15)*4 for half year=49200/2= $24600
	total accumulated depreciation for one and half year	=	$30750+$30750+$24600
			$86100
	since the above calculation of depreciation tally with the accumulated depreciation , the machine should be
	purchased on middle of the year 2020

(h)	cost of depreciation of machine D for the year 2022
	Depreciation upto 30 june 2022	=	(184500/15)*4 for half year=49200/2= $24600
	Depreciation upto 31 dec 2022	=	(184500/15)*3 for half year=36900/2= $18450
	Depreciation	=	$24600+$18450
		=	$43050