Problem 11-11
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 machine can operate for 101,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 20,200 hrs; 2016, 25,250 hrs; 2017, 15,150 hrs; 2018, 30,300 hrs; and 2019, 10,100 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 |
$ |
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(2) |
Activity Method |
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Year |
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2015 |
$ |
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2016 |
$ |
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2017 |
$ |
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2018 |
$ |
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2019 |
$ |
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(3) |
Sum-of-the-Years'-Digits Method |
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Year |
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2015 |
$ |
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2016 |
$ |
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2017 |
$ |
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2018 |
$ |
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2019 |
$ |
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(4) |
Double-Declining-Balance Method |
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Year |
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2015 |
$ |
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2016 |
$ |
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2017 |
$ |
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2018 |
$ |
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2019 |
$ |
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 |
|||
2015 |
$ |
$ |
$ |
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2016 |
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2017 |
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2018 |
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2019 |
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2020 |
Year | Straight-line Method | Sum-of-the-years'-digits method | Double-declining-balance method | Activity Method |
2015 | $ 16,968 | $ 28,280 | $ 36,360 | $ 16,968 |
2016 | $ 16,968 | $ 22,624 | $ 21,816 | $ 21,210 |
2017 | $ 16,968 | $ 16,968 | $ 13,090 | $ 12,726 |
2018 | $ 16,968 | $ 11,312 | $ 7,854 | $ 25,452 |
2019 | $ 16,968 | $ 5,656 | $ 5,721 | $ 8,484 |
$ 84,840 | $ 84,840 | $ 84,840 | $ 84,840 |
Straight-line Method | ||||
Purchase Value | Salvage Value |
Remaining Remaining estimated useful |
Percentage of Depreciation percentag(Remaing Year/15) | |
2015 | $ 90,900 | $ 6,060 | 5 | 33.33 |
2016 | $ 90,900 | $ 6,060 | 4 | 26.67 |
2017 | $ 90,900 | $ 6,060 | 3 | 20.00 |
2018 | $ 90,900 | $ 6,060 | 2 | 13.33 |
2019 | $ 90,900 | $ 6,060 | 1 | 6.67 |
100 | ||||
Double-declining-balance method | ||||
Book Valu Begining | Percentage2X((1/5*100)*2) | depreciation for the year | Book Vale End of the year | |
2015 | $ 90,900 | 40 | $ 36,360 | $ 54,540 |
2016 | $ 54,540 | 40 | $ 21,816 | $ 32,724 |
2017 | $ 32,724 | 40 | $ 13,090 | $ 19,634 |
2018 | $ 19,634 | 40 | $ 7,854 | $ 11,781 |
2019 | $ 11,781 | 40 | $ 5,721 | $ 6,060 |
The final double declining balance depreciation expense was $ 5721 which is more than than the actual $4712 (45% of $11,781 ) | ||||
It was done to keep the salvage value as estimated |
Problem 11-11 On January 1, 2015, a machine was purchased for $90,900. The machine has an...
Problem 11-11 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 machine can operate for 101,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 20,200 hrs; 2016, 25,250 hrs; 2017, 15,150 hrs; 2018, 30,300 hrs; and 2019, 10,100 hrs. Compute the annual depreciation charges over the machine’s...
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