Question

Exercise 9-6 Blossom Company purchased a new machine on October 1, 2019,, at a cost of $135,000. The company estimated that the machine will have a salvage value of $20,500. The machine is expected to be used for 10,000 working hours during its 4-year life. Compute the depreciation expense under straight-line method for 2019. (Round answer to o decimal places, e.g. 2,125.) 2019 Depreciation expense LINK Tο TE VIDEO: SIMILAR EXERCISE Compute the depreciation expense under units-of-activity for 2019, assuming machine usage was 1,630 hours. (Round depreciable cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answer to 2 decimal places, e.g. 2,125.25.) 2019 Depreciation expense LINK Tο TE VIDEO: SIMILAR EXERCISE Compute the depreciation expense under declining-balance using double the straight-line rate for 2019 and 2020. (Round answers to 0 decimal places, e.g. 2,125.) 2019 2020 Depreciation pen

Answer 1

Answer:

Straightline Method:

Cost = $135000

Salvage Value = $20500 ; Life of asset = 4 years ; Working hours = 10000

Depreciation = (Cost - salvage Value) / lIfe of asset = ( 135000 - 20500 ) / 4 = 28625 x 3/12 = 7156

Units of Activty Method:

Depreciation 2019 = (Cost - salvage Value) x hours this Year / Total Estimated hours = ( 135000 - 20500 ) x 1630 / 10000 = 18663.50

Declining Balance method:

Depreciation = 2 x straightline depreciation rate x Book value at the beginning of the year

Depreciation = 2 x 1/4 x Book value

2019 = 2 x 1/4 x 135000 = 67500 x 3/12 = 16875

2020 = (135000 - 16875 ) x 2 x 1/4 = 59063