Question

Splish Corp. purchased machinery for $381,600 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $18,600, production of 290,400 units, and working hours of 25,000. During 2021, Splish Corp. uses the machinery for 2,650 hours, and the machinery produces 31,620 units. From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers to O decimal places, e.g. 45,892.) (a) Straight-line to 36300 (b) Units-of-output to 39525 to 38478 (c) Working hours (d) Sum-of-the-years'-digits to 61598 (e) Declining-balance (use 20% as the annual rate) to 66144

Answer 1

Since remaining four are correct, I am calculating sum of the year digit method.

Depreciation base = cost - salvage value

= $381600 - $18600

= $363000

Total sum of years digit from 1 to 10

= 55

Remaining life in 2021 = 9

Depreciation expense = $363000*9/55 = $59400

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