1. (1) Straight-line depreciation.
At the beginning of Year 1, Auto Manufacturing purchased a new computerized assembling machine for $95,000. It is expected to have a five-year life and a $20,000 salvage value.
Required
a. Compute the depreciation for each of the five years, assuming that the company uses
(1) Straight-line depreciation.
(2) Double-declining-balance depreciation.
b. Record the purchase of the assembly machine and the depreciation expense for the first year under the straight-line and double-declining-balance methods in a financial statements model.
c. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses
Narration/Animation Script: In this exercise, we will compute the depreciation for each of the five years using the straight-line method and the double-declining method. We will also record the purchase of the machine and the depreciation expense in a financial statements model and prepare journal entries to record depreciation expense.