Question

Exercise 11-07 Marigold 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 0 decimal places, e.g. 45,892.) Date Purchased Salvage Value Life in Years Description Accumulated Depreciation to 12/31/21 Depreciation Method Depreciation for 2022 Cost $ Machine A 2/12/20 $148,200 $16,640 10 (a) $34,684 (b) Machine B 8/15/19 21,840 5 SL 30,160 (d) Machine C 7/21/18 89,600 23,500 8 (f) DDB (e) SYD Machine D (9) 227,760 71,760 5 72,800 (h) Click if you would like to Show Work for this question: Open Show Work

Answer 1

(a)	Determination of the depreciation method
	Cost of machine A	=	$148200
	Date of purchase	=	12-Feb-20
	Salvage value		$16640
	Depreciable cost	=	$148200-$16640	= 131560
	Accumulated Depreciation upto 31 dec,2021( for one and half year)	=	$24684
	Depreciation under the sum of year digit method		(Remaining useful life of an asset	/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	=	($131560/55)*10	for half year=23920/2=11960
	Depreciation upto 30june 2021	=	($131560/55)*10	for half year=23920/2=11960
	Depreciation upto 31 dec 2021	=	($131560/55)*9	for half year=21528/2=10764
	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 up to 30 June 2022	=	($131560/55)*9
	Depreciation up to 31 Dec 2022	=	($131560/55)*8
	Depreciation	=	10764+9568
		=	$20332

(c)	calculation of the cost of machine B
	date of purchase	=	15-Aug-19
	salvage value	=	$21840
	Accumulated depreciation under straight line method upto 31 dec 2021 for 2 and half years)	=	$30160
	Annual depreciation	=	$30160/2.5	$12064
	Life of machinary	=	5 years
	Depreciable cost of machine	=	$12064*5	$60320
	cost of machine B = depreciable cost+ salvage value
		=	$60320+$21840
		=	$82160

(d)	calculation of depreciation of machine B for 2022
	depreciation	=	(82160-21840)/5
		=	$12064

(e)	calculation of accumulated depreciation of machine C up to
	31 Dec 2021 under the double-declining balance method
	cost of machine	=	$89600
	salvage value	=	$23500
	date of purchase	=	21-Jul-18
	life of machine	=	8 years
	depreciation for the year 2018 using half year convention	=	(89600/8)*2 for half year=22400/2= $11200
	depreciation up to 30 June 2019	=	(89600/8)*2 for half year=22400/2= $11200
	depreciation up to 31 Dec 2019	=	((89600-22400)/8)*2 for half year=16800/2= $8400
	depreciation up to 30 June 2020	=	((89600-22400)/8)*2 for half year=16800/2= $8400
	depreciation up to 31 Dec 2020	=	((67200-16800)/8)*2 for half year=12600/2=6300
	depreciation up to 30 June 2021	=	((67200-16800)/8)*2 for half year=12600/2=6300
	depreciation up to 31 Dec 2021	=	((50400-12600)/8*2) for half year=9450/2= $4725
	Accumulated depreciation	=	11200+11200+8400+8400+6300+6300+4725
		=	$56525

(f)	calculation of depreciation of machine C
	depreciation up to 30 June 2022	=	((50400-12600)/8*2) for half year=9450/2= $4725
	depreciation up to 31 Dec 2022	=	((37800-9450)/8*2) for half year=7078.5/2= $3544
		=	4725+3544
	depreciation	=	8269

(g)	determine the date of purchase of machine D
	Cost of machine D	=	$227760
	Salvage value	=	$71760
	Life of machine	=	5 years
	Accumulated Depreciation upto 31 dec 2021	=	$72800
	Depreciation method	=	sum of year digit method
	depreciable cost	=	$227760-$71760 = $156000
	depreciation for the first half year should be	=	(156000/15)*5 for half year=52000/2= $26000
	depreciation for the second half year should be	=	(156000/15)*5 for half year=52000/2= $26000
	depreciation for the third half year should be	=	(156000/15)*4 for half year=41600/2= $20800
	total accumulated depreciation for one and half year	=	$26000+$26000+$20800
			$72800

since the above calculation of depreciation tally with the accumulated depreciation, the machine should be

purchased on the middle of the year 2020

(h)	cost of depreciation of machine D for the year 2022
	Depreciation up to 30 June 2022	=	(156000/15)*4 for half year=41600/2= $20800
	Depreciation up to 31 Dec 2022	=	(156000/15)*3 for half year=31200/2= $15600
	Depreciation	=	$20800+$15600
		=	$36400