Question

Exercise 9-20

Blossom Company purchased a new machine on October 1, 2017, at a cost of $85,000. The company estimated that the machine has a salvage value of $7,000. The machine is expected to be used for 60,000 working hours during its 8-year life.

Compute depreciation using the following methods in the year indicated.

Declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125)

2017
2018
Depreciation using the Declining-balance method
$enter a dollar amount
$enter a dollar amount

LINK TO TEXT

Calculate the depreciation cost per hour. (Round answer to 2 decimal places, e.g. $1.25)

Depreciation cost per hour
$enter the depreciation cost per hour in dollars rounded to 2 decimal places

Units-of-activity for 2017, assuming machine usage was 400 hours. (Round answer to 0 decimal places, e.g. 125)

Depreciation using the Units-of-activity method for 2017
$enter the units-of-activity depreciation cost for 2017 in dollars

Answer 1

1)	Double declining balance method:
	Rate of depreciation = (100%/8)*2 =	25%
	Answer:
	Depreciation for 2017 = 85000*25% =	$        21,250
	Depreciation for 2018 = (85000-21250)*25% =	$        15,938
2)	Units of activity method:
	Depreciation cost per hour = (85000-7000)/60000 =	$            1.30
	Answer:
	Depreciation for 2017 = 400*1.3 =	$ 520