Question

Problem 11-11 (Part Level Submission) On January 1, 2015, a machine was purchased for $97,200. The machine has an estimated salvage value of $6,480 and an estimated useful life of 5 years. The machine can operate for 108,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 21,600 hrs; 2016, 27,000 hrs; 2017, 16,200 hrs; 2018, 32,400 hrs; and 2019, 10,800 hrs.

(a) 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 2015 $ 2016 $ 2017 $ 2018 $ 2019 $ (3) Sum-of-the-Years'-Digits Method Year 2015 $ 2016 $ 2017 $ 2018 $ 2019 $ (4) Double-Declining-Balance Method Year 2015 $ 2016 $ 2017 $ 2018 $ 2019 $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

(a)

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	(97200-6480/5)	$18144
(2)		Activity Method
		Year
		2015	21600*.84	$18144
		2016	27000*.84	$22680
		2017	16200*.84	$13608
		2018		$27216
		2019	10800*.84	$9072
(3)		Sum-of-the-Years'-Digits Method
		Year
		2015	90720*5/15	$30240
		2016		$24192
		2017		$18144
		2018		$12096
		2019		$6048
(4)		Double-Declining-Balance Method
		Year
		2015	97200*40%	$38880
		2016	97200*60%*40%	$23328
		2017		$13997
		2018	20995*40%	$8398
		2019		$6117