On 1 July 2020, PMP Pty Ltd purchased a new printing machine for $200,000. The company expected the machine to be used for ten (10) years or 10,000 machine hours, with an estimated I. residual value of $20,000 at the end of its useful life. Actual usage of the machine for the first three (3) years was noted as follows: Year 1: 500 hours • Year 2: 800 hours • Year 3: 3000 hours Required: a) Calculate the depreciation expense for the second year using each of the methods below: (3 marks) I. Straight-line II. Units of production III. Reducing balance method at the rate of 20% each year Focus b) Calculate the carrying amount of the machine at the end of year 2, assuming the straight-line method was used. (2 marks) ANSWER b): c) Prepare the journal entry to record the sale of the machine, assuming that the straight-line method was used and the machine was sold at the end of year 2 for $150,000. (2 marks) ANSWER C):
