Question

Ayayai Corp. purchased a new machine on October 1, 2022 at a cost of $187,200. The company estimated that the machine has a salvage value of $14,400. The machine is expected to be used for 144,000 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Straight-line for 2022 and 2023, assuming a December 31 year-end. (Round answers to 0 decimal place, e.g. 1520.) 2022 2023 Straight-line method Declining-balance using double the straight-line rate for 2022 and 2023. 2022 2023 Declining-balance method Units-of-activity for 2022, assuming machine usage was 5,220 hours. (Round depreciation per unit to the nearest cent.) Units-of-activity method 2022 $

Answer 1

Straight line method = (Cost - Salvage value) /Useful life

2022 = (187,200-14,400)/8 * 3/12 = 5400

2022 = 21,600

.

Double declining rate = 200/Useful life = 200/8 = 25%

2022 = 187,200*25%*3/12 = 11,700

2023 = (187,200-11,700)*25% = 43,875

.

Units of activity = (187,200-14,400)/144,000 * 5220

= 6264

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