Question

Problem 11-2 The cost of equipment purchased by Pina, Inc., on June 1, 2017, is $95,230. It is estimated that the machine will have a $5,350 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 44,940, and its total production is estimated at 561,750 units. During 2017, the machine was operated 6,420 hours and produced 58,850 units. During 2018, the machine was operated 5,885 hours and produced 51,360 units. Compute depreciation expense on the machine for the year ending December 31, 2017, and the year ending December 31, 2018, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.) 2017 2018 | | (a) Straight-line (b) Units-of-output " (c) Working hours " (d) Sum-of-the-years'-digits " ी ी (e) Double-declining-balance (twice the straight-line rate) " LINK TO TEXT By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Question Attempts: 0 of 5 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

a)	Straight Line
	Cost			$ 95,230.00
	Salvage value			$   5,350.00
	Depreciable cost			$ 89,880.00
	Service Life			7	years
	Depreciation expense			$ 12,840.00	per year
	For 2017	$ 12840 x 7/12 =		$         7,490
	For 2018			$      12,840

b)	Units of output
	Cost			$ 95,230.00
	Salvage value			$   5,350.00
	Depreciable cost			$ 89,880.00
	Total production units			561750
	Depreciation expense per unit			$           0.16
	For 2017	$ 0.16 x 58850		$         9,416
	For 2018	$ 0.16 x 51360		$         8,218

c)	Working hours
	Cost			$ 95,230.00
	Salvage value			$   5,350.00
	Depreciable cost			$ 89,880.00
	Total working hours			44940
	Depreciation expense per hour			$           2.00
	For 2017	$ 2 x 6420		$ 12,840.00
	For 2018	$ 2 x 5885		$ 11,770.00

d)	Sum of the years' digits
	Cost						$ 95,230.00
	Salvage value						$   5,350.00
	Depreciable cost						$ 89,880.00
	Total sum of the years			(7 + 6 + 5 + 4 + 3 + 2 + 1)			28
	For 2017	$ 89880 x 7/28 x 7/12					$      13,108
	For 2018	($ 89880 x 7/28 x 5/12) + ($ 89880 x 6/28 x 7/12)					$      20,598

e)	Double Declining Balance
	Cost			95230
	Rate of depreciation (100% x 2/7)			28.57%
	For 2017	($ 95230 x 28.57% x 7/12)			$      15,871
	For 2018	[($ 95230 - $ 15871) x 28.57%]			$      22,673

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