Question

The cost of equipment purchased by Sheffield, Inc., on June 1, 2020, is $100,800. It is...

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) $ $

Homework Answers

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
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