Question

n January 1, 2013, Bark Manufacturing Company Ltd. purchased a machine for $27,500, and expects to use the machine a total of 32,000 hours over the next four years. Bark set the residual value on the machine at $3, 500. Bark used the machine 6,000 hours in 2013 and 7,200 hours in 2014. 4. What is the amortization expense for 2014 if Bark uses double-declining-balance amortization? A) $6,875 B) $13,750 C) $12,000 D) $6,000 E) $3,500 eh nt 5. What is the amortization expense in 2014 if Bark uses units-of-production amortization? A) $4,500 B) $5,400 C) $6, 192 D) $5, 156 E) $3,500 7200 32000 32000

Answer 1

4. Double declining rate = 200/useful life = 200/4 = 50% Depreciation for 2013 = 27,500*50% = 13,750 Depreciation for 2014 = (27,500-13,750)*50% = 6875 Option A
5. Depreciation per unit = (Cost- Salvage value) /Expected hours = (2,7500-3,500)/32,000 = 0.75 per hour Depreciation for 2014 = 7200 hours * 0.75 = 5400 Option B