Part I(a)Strong Company bought a piece of machinery on 1 March 2021 at a cost ofS124,000 with a residual value of $4,000.The estimated useful life of thismachinery was 10 years.The estimated operation output was 10,000 hours.Compute the depreciation expense of the machinery at the year-end on 31December for 2021 and 2022 by using the methods shown below (show yourworkings):(i)Straight-line (with depreciation calculated to the nearest whole month),(ii)Unit-of-output (Output:1,000 hours in 2021;3,000 hours in 2022).Depreciation(i)Straight-line Method(ii)Units-of-outputexpenseMethod20212022(b)Strong Company also purchased an equipment at a cost of $200,000 at thebeginning of the year.The estimated useful life of the equipment was 4 years andhad a residual value $9,000.If Strong uses double-declining-balance deprecationmethod,prepare a detailed schedule for depreciation,accumulated depreciation,and book value for all the years during its useful life.Use the following table toshow your answers (show your workings).YearDepreciationAccumulatedBook value atExpense for the yeardepreciation at year endyear end1234(c)On 30th November 2023,Strong Company decided to sell the above machinery in(a)for S80,000 cash.Assuming that the company uses straight-line depreciationmethod in (a)(i)and adjusts the depreciation expenses annually,prepare thefollowing journal entries:(i)to adjust the depreciation expense for 2023;(ii)to record the disposal on 30 November 2023.Part II(a)The following expenditure was incurred on the Van purchased a few years ago.Prepare the journal entries for the following transactions:(i)Installed a new engine to recondition the van thoroughly for cash S60,000;(ii)Conducted routine repairing on the van for cash $1,000.(b)If a capital expenditure is erroneously recorded as a revenue expenditure,will theprofit of the current year be overstated,understated or unaffected?
