Reference no: EM132562850

In recent years, Pablo Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and each selected a different method.

Information concerning the machines is summarized below.

                                             Salvage          Useful Life                Depreciation

Machine     Acquired    Cost            Value              in Years                    Method

1                   1/1/07   $105,000     $5,000             10                    Straight-line

2                       1/1/08   150,000    10,000             8                 Declining-balance

3                       11/1/10     100,000     15,000         6                   Units-of-activity

For the declining-balance method, the company uses the double-declining rate. For the units-of activity method, total machine hours are expected to be 25,000. Actual hours of use in the first3 years were: 2010, 2,000; 2011, 4,500; and 2012, 5,500.

Instructions

Question (a) Compute the amount of accumulated depreciation on each machine at December 31,2010.

Question (b) If machine 2 had been purchased on May 1 instead of January 1, what would be the depreciation expense for this machine in (1) 2008 and (2) 2009?