Question

On October 1, 2016, the Allegheny Corporation purchased machinery for $267,000. The estimated service life of the machinery is 10 years and the estimated residual value is $3,000. The machine is expected to produce 480,000 units during its life.

Required:

Calculate depreciation for 2016 and 2017 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. (Do not round intermediate calculations.)

1.	Straight line.

Straight-Line Depreciation
	Choose Numerator:	/	Choose Denominator:	=	Annual Depreciation
		/		=	Annual Depreciation
		/		=
Year	Annual Depreciation	x	Fraction of Year	=	Depreciation Expense
2016		x		=
2017		x		=

Sum-of-the-years’ digits.

Sum-of-the-years' digits depreciation
	Depreciable Base	x	Rate per Year	x	Fraction of Year	=	Depreciation Expense
10/1/2016 through 12/31/2016		x		x		=
Total depreciation expense - 2016
1/1/2017 through 9/30/2017		x		x		=
10/1/2017 through 12/31/2017		x		x		=
Total depreciation expense - 2017

Double-declining balance.

	Depreciation for the Period				End of Period
Annual Period	Beginning of Period Book Value	Depreciation Rate	Fraction of Year	Depreciation Expense	Accumulated Depreciation	Book Value
2016
2017

One hundred fifty percent declining balance.

	Depreciation for the Period				End of Period
Annual Period	Beginning of Period Book Value	Depreciation Rate	Fraction of Year	Depreciation Expense	Accumulated Depreciation	Book Value
2016						$0
2017					$0	$0

Answer 1