Question

On January 1, 2018, Canseco Plumbing Fixtures purchased equipment for $64,000. Residual value at the end of an estimated four-year service life is expected to be $10,000. The company expects the machine to operate for 10,000 hours. The machine operated for 3,900 and 4,700 hours in 2018 and 2019, respectively. Calculate depreciation expense for 2018 and 2019 using straight line method. Calculate depreciation expense for 2018 and 2019 using sum-of-the-years'-digits method. Calculate depreciation expense for 2018 and 2019 using double-declining balance method. Calculate depreciation expense for 2018 and 2019 using units-of-production method (using machine hours). (Round "Depreciation per machine hour" answers to 2 decimal places.)

Answer 1

Calculate depreciation expense for 2018 and 2019 using straight line method.

Depreciation expense = (64000-10000)/4 = 13500 per year

2018 Dep = 13500

2019 Dep = 13500

Calculate depreciation expense for 2018 and 2019 using straight line method.

Sum of year digit = 4+3+2+1 = 10

Depreciable base = 64000-10000 = 54000

2018 Dep = 54000*4/10 = 21600

2019 Dep = 54000*3/10 = 16200

Calculate depreciation expense for 2018 and 2019 using double-declining balance method.

Double decline rate = 100/4*2 = 50%

2018 Dep = 64000*50% = 32000

2019 Dep = 32000*50% = 16000

Calculate depreciation expense for 2018 and 2019 using units-of-production method (using machine hours). (Round "Depreciation per machine hour" answers to 2 decimal places.)

Depreciation rate = (64000-10000)/10000 = 5.40 per hour

2018 Dep = 3900*5.4 = $21060

2019 dep = 4700*5.4 = $25380