Question

On January 1, 2017, Wesley's Machining & Welding, Inc. (WMW) purchased equipment for $62,000. It cost...

On January 1, 2017, Wesley's Machining & Welding, Inc. (WMW) purchased equipment for $62,000. It cost an additional $3,000 to deliver, install, and calibrate the equipment. This machine has a service life of 5 years, at which time it is expected that the device will be scrapped for a $5,000 salvage value.

WMW uses the straight-line depreciation method. Use the attached worksheet to complete the following:

  • Prepare a worksheet to determine annual depreciation.
  • Prepare a depreciation schedule showing annual depreciation expense, accumulated depreciation, and related calculations for each year.
  • Show how the asset and related accumulated depreciation would appear on a balance sheet at December 31, 2020.
a) Worksheet
Equipment Depreciation Worksheet
Cost of Equipment (including delivery, set-up)
Less: Estimated residual value
Total to be depreciated $                -  
Estimated useful life
Annual depreciation expense #DIV/0!
b) Depreciation Schedule
Equipment Depreciation Schedule-Straight Line
Year Annual Expense Accumulated
Depreciation at End of Year
Book Value
$                -  
2017 #DIV/0!
2018
2019
2020
2021
c) Balance Sheet Entry
Property, Plant & Equipment (Dec. 31, 2020)
Equipment
Less: Accumulated depreciation

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