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-ofactivity method, total machine hours are expected to be 25,000. Actual hours of use in the first 3 years were: 2010, 2,000; 2011, 4,500; and 2012, 5,500.
Instructions
(a) Compute the amount of accumulated depreciation on each machine at December 31, 2010.
(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?