Question

Skysong, Inc. purchased a new machine on October 1, 2020, at a cost of $118,000. The company estimated that the machine will have a salvage value of $12,000. The machine is expected to be used for 10,000 working hours during its 5-year life. Compute the depreciation expense under straight-line method for 2020. (Round answer to O decimal places, eg. 2,125.) 2019 $ Depreciation expense eTextbook and Media Compute the depreciation expense under units-of-activity for 2020, assuming machine usage was 1,610 hours. (Round depreciation 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.) 2020 $ Depreciation expense e Textbook and Media Compute the depreciation expense under declining-balance using double the straight-line rate for 2020 and 2021. (Round answers to 0 decimal places, eg. 2,125.) 2020 2021 $ $ Depreciation expense eTextbook and Media

Answer 1

|Straight-Line Method: 2020 Depreciation expenseS 5,300 Units of Activity 2020 Depreciation expense $17,066 Double Declining balance 2021 2020 Depreciation expense $11,800 $42,480 Working Notes: Straight Line Cost of new machine= $118,000 Salvage value $12,000 useful life 5 years Annual Depreciation =(Cost of machine - Salvage Value)/Useful Life (S118,000-$12,000)/5 $21,200 Depreciation for 2020 = $21,200*3/12 $5,300

|Units of Activity Total expected hours to be used 10,000 202 Usage hours = 1,610 hours Depeciable Cost = Cost of machine - salvage value $118,000-S12,000 $106,000 Depreciation $106,000*1,610/10,000 = S17,066 |Double declining balance Depreciation rate = 1/5* 100*2 40% Depreciation for 2020 S118,000*40%*3/12 = $11,800 Depreciation for 2021 ($118,000-S11,800)*40%= $42,480