Question

Sheridan Corp. purchased machinery for $313,500 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $16,500, production of 237,600 units, and working hours of 25,000. During 2021, Sheridan Corp. uses the machinery for 2,650 hours, and the machinery produces 27,300 units. From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers to 0 decimal places, e.g. 45,892.) ___ (a) Straight-line (b) Units-of-output + (c) Working hours (d) Sum-of-the-years'-digits 0 (e) Declining-balance (use 20% as the annual rate) $

Answer 1

Solution (1) Straight line: Depreciation expense a (per annum] cost - Estimated Salvage Value useful life $ 313500-16500 10 = $ 2970 per annum For 1 the year 2021 [may to December Apri i. e Emonths) 29.70 X8 12 $ 1980 (2) Units of output (Cost-Solvage value) units produced during the year Total Estimated production 13 13500-16500 X 27300 237600 = $ 34125 per annum. For the year 2011 May to December 8 months 34 125 88/2 => $ 82750

(3 klorking hours Cost - Salvage vame working hours during the year Total estimated working hours 313500 - 16500 X 2650 25000 $31482 per annum For the year 2021 - It 8months $31482 x 8 $ 20988 (4) Sun of Sum of the the years years digits in cotl) 2 9 10 (10+) Depreciation expense = - for the year 2021 = CFor smonths) 55 313500-16500 x 10 $ 54000 (pevannum, 54000 88 12 $ 36000 Declining balance: Depreciation rate - Depreuation expense & (For 2011 year) . for smonths) 20% (given) 331500X20% X 8112 $ 44200