Question

prepare a depreciation schedule with the method listed on a milk machine that cost $35,000 has a five-year life or 100,000 hour life, with a residual value of $5000. the milk machine was used 35,000 hours the first year, 20,000 hours the third and 20,000 hours the fourth year and 25,00 the fifth year. find units and double decline for five years.

Answer 1

Deprecation based on allocation of cost

Deprecation = cost of the asset- residual value / useful life = $35000-5000/5 =$ 6000 per year for 5 years

Deprecation based on allocation of hours = cost of the asset- residual value×used hours/ total hours

For 1st year = $35,000-$5000/100000*35000=$10,500 is depreciation

For 2nd year = No depreciation because the asset is not put for use.

For 3rd year =30,000*20,000/100000= $6000

For 4th year = 30000*20000/100000 = $6000

For 5th year = 30000*25000/100000 = 7500