[The following information applies to the questions
displayed below.]
Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to
add to the wellness programs at NGS. The machine was purchased at
the beginning of the year at a cost of $19,000. The estimated
useful life was five years and the residual value was $1,000.
Assume that the estimated productive life of the machine is 10,000
hours. Expected annual production was year 1, 2,250 hours; year 2,
2,450 hours; year 3, 2,200 hours; year 4, 2,100 hours; and year 5,
1,000 hours.
Required:
- Complete a depreciation schedule for each of the alternative
methods.
- Straight-line.
- Units-of-production.
- Double-declining-balance.
- Assume NGS sold the hydrotherapy tub system for $5,700 at the
end of year 3. Prepare the journal entry to account for the
disposal of this asset under the three different methods.
(Do not round intermediate calculations. If no entry is
required for a transaction/event, select "No Journal Entry
Required" in the first account field. Round your final answers to
the nearest dollar amount.)
- Assume NGS sold the hydrotherapy tub system for $5,700 at the
end of year 3.The following amounts were forecast for year 3: Sales
Revenues $56,000; Cost of Goods Sold $44,000; Other Operating
Expenses $4,650; and Interest Expense $650. Create an income
statement for year 3 for each of the different depreciation
methods, ending at Income before Income Tax Expense. (Don't forget
to include a loss or gain on disposal for each method.).
(Do not round intermediate calculations. Round your answers
to the nearest dollar amount.)