Question

On January 1, 2018, a machine was purchased for $105,000. The machine has an estimated salvage value of $8,100 and an estimated useful life of 5 years. The machine can operate for 114,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 22,800 hrs; 2019, 28,500 hrs; 2020, 17,100 hrs; 2021, 34,200 hrs; and 2022, 11,400 hrs.

Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. (Round answers to 0 decimal places, e.g. 45,892.)

1.		Straight-line Method		$
2.		Activity Method
		Year
		2018		$
		2019		$
		2020		$
		2021		$
		2022		$
3.		Sum-of-the-Years'-Digits Method
		Year
		2018		$
		2019		$
		2020		$
		2021		$
		2022		$
4.		Double-Declining-Balance Method
		Year
		2018		$
		2019		$
		2020		$
		2021		$
		2022		$

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Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods. (Round answers to 0 decimal places, e.g. 45,892.)

Year		Straight-line Method		Sum-of-the-years'-digits method		Double-declining-balance method
2018		$		$		$
2019
2020
2021
2022
2023

Answer 1

CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD
Purchase Cost of Equipment =	$                       105,000
Less: Salvage Value	$                            8,100
Net Value for Depreciation (A)	$                         96,900
Useful life of the Assets (B)	5	Years
Depreciation per year = Value for Depreciation (A/B)	$                         19,380
Year	Assets Cost		Depreciation Expenses		Accumulated Depreciation		Book Value
Purchase	105,000						$             105,000
Year 2018			$              19,380		$           19,380		$               85,620
Year 2019			$              19,380		$           38,760		$               66,240
Year 2020			$              19,380		$           58,140		$               46,860
Year 2021			$              19,380		$           77,520		$               27,480
Year 2022			$              19,380		$           96,900		$                  8,100
CALCULATION OF THE DEPRECIATION AS PER UOP METHOD
Purchase Cost of Equipment =	$                       105,000
Less: Salvage Value =	$                            8,100
Net Value for Depreciation (A)	$                         96,900
Expected to Produce in Units (B)	114,000	Hrs
Depreciation per Units = (A/B)	$                              0.85	Per Hours
Year	Units		Depreciable Units	X	Rate Per Unit	=	Depreciation Expenses	Accumulated Depreciation	Book Value
Year 2018	22,800		22,800	X	$                0.85	=	$               19,380	$             19,380	$           85,620
Year 2019	28,500		28,500	X	$                0.85	=	$               24,225	$             43,605	$           61,395
Year 2020	17,100		17,100	X	$                0.85	=	$               14,535	$             58,140	$           46,860
Year 2021	34,200		34,200	X	$                0.85	=	$               29,070	$             87,210	$           17,790
Year 2022	11,400		11,400	X	$                0.85	=	$                  9,690	$             96,900	$             8,100
CALCULATION OF THE DEPRECIATION AS PER DOUBLE DECLINE METHOD
Purchase Cost of Equipment =	$                       105,000
Rate of Depreciation =
Rate of Depreciation = (1 / 5 Years )	0.20 or 20%
(Depreciation / Purchase price )
Double decline deprecation rate = 20.00% * 2 =	40.0%
Year	Assets Cost		Beginning Book Value	X	Rate of Depreciation	=	Depreciation Expenses	Accumulated Depreciation	Book Value
Purchase	105,000								$        105,000
Year 2018			$            105,000	X	40.00%	=	$               42,000	$             42,000	$           63,000
Year 2019			$              63,000	X	40.00%	=	$               25,200	$             67,200	$           37,800
Year 2020			$              37,800	X	40.00%	=	$               15,120	$             82,320	$           22,680
Year 2021			$              22,680	X	40.00%	=	$                  9,072	$             91,392	$           13,608
Year 2022			$              13,608 0 0 Add a comment Know the answer? Your Answer: Post as a guest Your Name: What's your source? Earn Coins Coins can be redeemed for fabulous gifts. Log In Sign Up Post as anonymous Post Your Answer Not the answer you're looking for? Ask your own homework help question Similar Questions On January 1, 2015, a machine was purchased for $90,900. The machine has an estimated salvage... On January 1, 2015, a machine was purchased for $90,900. The machine has an estimated salvage value of $6,060 and an estimated useful life of 5 years. The company closed its books on December 31. Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying the following methods. (Round answers to 0 decimal places, e.g. 45,892.) Year Sum-of-the-years'-digits method 2015 - Answer is $ 21210 2016 2017 2018 2019 2020 On January 1, 2017, a machine was purchased for $90,000. The machine has an estimated residual... 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