Question

# Exercise 9-20 Blossom Company purchased a new machine on October 1, 2017, at a cost of...

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

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

 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

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