Question

The cost of equipment purchased by Sheffield, Inc., on June 1, 2020, is $100,800. It is estimated that the machine will have a $8,400 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 46,200, and its total production is estimated at 660,000 units. During 2020, the machine was operated 7,080 hours and produced 64,900 units. During 2021, the machine was operated 6,490 hours and produced 56,600 units.

Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.)

				2020		2021
(a)		Straight-line		$		$
(b)		Units-of-output		$		$
(c)		Working hours		$		$
(d)		Sum-of-the-years'-digits		$		$
(e)		Double-declining-balance (twice the straight-line rate)		$		$

Answer 1

Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.)

				2020		2021
(a)		Straight-line		(100800-8400/7)*7/12 = 7700		13200
(b)		Units-of-output		64900*.14 = 9086		7924
(c)		Working hours		7080*2 = 14160		12980
(d)		Sum-of-the-years'-digits		92400*7/28*7/12 = 13475		9625+11550 = 21175
(e)		Double-declining-balance (twice the straight-line rate)		100800*28.57%*7/12 = 16799		11999+11999 = 23999