Question

On January 1, 2015, a machine was purchased for $102,600. The machine has an estimated salvage value of $6,840 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: 2015, 22,800 hrs; 2016, 28,500 hrs; 2017, 17,100 hrs; 2018, 34,200 hrs; and 2019, 11,400 hrs.

B. ssume 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.)

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.)

Your answer is partially correct. 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 O decimal places, e.g. 45,892.) Year Straight-line Method Sum-of-the-years'-digits method Double-declining-balance method 2015 $ 61560 30828 23,940 19,152 28,773 2016 27132 2017 19,152 20748 17,264 2018 19,152 14,364 10,358 19,152 2019 7,980 6,215 4788 2020 1,596 2,483 LA

Answer 1

Ans:

1.Depreciation Under Stright Line Method

Depreciation         = ( Cost of the Equipment – Salvage Value )/ Useful Life

                             = ( $ 102600 - $ 6840 ) /5 Years

                             = $ 19152 year

Depreciation Year 2015 = $ 19152 x 9/12 = $ 14364

Depreciation Year 2016 = $ 19152

Depreciation Year 2017 = $ 19152

Depreciation Year 2018 = $ 19152

Depreciation Year 2019 = $ 19152

Depreciation Year 2020 = $ 4788

2.Depreciation Under Sum of years digit method

Depreciation Year 2015 = $ 95760 x 5/15 x 9/12 = $ 23940

Depreciation Year 2016 = $ 95760 x 4/15 = $ 25536

Depreciation Year 2017 = $ 95760 x 3/15 = $ 19152

Depreciation Year 2018 = $ 95760 x 2/15 = $ 12768

Depreciation Year 2019 = $ 95760 x 1/15 = $ 6384

Depreciation Year 2020 = $ 7980

3. Depreciation Under Double Declining Balance

Year	Book Value Beginning	Double Declining Depreciation = 2 x SL Depreciation Rate x Book Value Beginning	Net Book Value End
2015	102600	30780	71820
2016	71820	28728	43092
2017	43092	17237	25855
2018	25855	10342	15513
2019	15513	6205	9305
2020	9305	2465	6840

Straight Line Depreciation Rate = 1/5 = 20%

Depreciation Year 2015 = $ 30780

Depreciation Year 2016 = $ 28728

Depreciation Year 2017 = $ 17237

Depreciation Year 2018 = $ 10342

Depreciation Year 2019 = $ 6205

Depreciation Year 2020 = $ 2465