Homework Answers
Answer to part a :
Depreciation = [Purchase cost - Salvage value] / Life of machine
Since these machines have no salvage value & life of 7 years
- Depreciation of machine 1 of 1 year = 50000 / 7 = 7142.86
since machine 1 acquired on 1 febuary, so depreciation is charged for 11 months i.e.
7142.86 *11 /12 = $ 6548
- Depreciation of Machine 2 for 1 year = 70000 / 7 = 10000 Since Machine 2 acquired on 1 april, so depreciation is charged for 9 months i.e. 10000 * 9/12 = $ 7500
- Depreciation of Machine 3 for 1 year = 60000/7 = 8571.43 since machine 3 acquired on 1 october, so depreciation is charged for 3 months only i.e. 8571.43 * 3/12 = $ 2143
- Depreciation of Machine 4 for 1 year = 80000 / 7 = 11428.57 since Machine 4 acquired on 1 december, so depreciation is charged for 1 month only i.e. 11428.57 * 1/12 = $ 952
Total Depreciation expense reported in Schdule C = 6548 + 7500 + 2143 + 952 = $ 17143
Answer to part b:
Since third machine acquired on sept 30 instead of 1 oct, depreciation of 1 more day is charged Total days machine is in use after purchase is :
sept 1 days
oct 31 days
nov 30 days
dec 31 days
total 93 days
depreciation of machine 3 for 1 year = $ 8571.43
so depreciation of 93 days = 8571.43 * 93/365 = $2188 Total depreciation reported in schdule C = 6548 + 7500 + 2188 + 952 = $ 17188
Difference between answers of part a nd part b = 17188 - 17143 = $45
Add Answer to:
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