Question

Exercise 9-24 Pharoah Company purchased a new machine on October 1, 2022, at a cost of $80,100. The company estimated that the machine has a salvage value of $7,380. The machine is expected to be used for 72,000 working hours during its 10-year life. Compute depreciation using the following methods in the year indicated. Your answer is incorrect. Try again Declining-balance using double the straight-line rate for 2022 and 2023 2022 2023 Depreciation using the Declining-balance method LINK ΤOΤΕXT LINK TO VIDEO Your answer is incorrect. Try again. Calculate the depreciation cost per hour. (Round answer to 2 decimal places, e.g. $1.25) Depreciation cost per hour Units-of-activity for 2022, assuming machine usage was 500 hours. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation using the Units-of-activity method for 2022 Open Show Work Click if you would like to Show Work for this question:

Answer 1

Calculation of Declining Balance twice of Straight line is called Double Declining Balance Method

Calculation of Double Declining Balance using Excel

А. 1 Cost of machine 2 Salvage Value 3 Machine Hours 4 Life of Asset 5 Purchased on B $80,100 $7,380 72,000 1/10/2022 D E F G Decling Balance Method | Year Period Depreciation Book Value 12/31/2022 1 $16.020.00 $64,080.00 12/31/2023 2 $12.816.00 $51,264.00 12/31/2024 3 $10.252.80 $41,011.20 12/31/2025 4 $8.202.24 $32,808.96 12/31/20265 $6,561.79 $26.247.17 12/31/2027 $5,249.43 $20.997.73 12/31/20287 $4.199.55 $16.798.19 12/31/20298 $3,359.64 $13,438.55 12/31/2030 9 $2.687.71 $10.750.84 12/31/2031 10 $2.150.17 $8.600.67 Declining Balance Depreciation 2022 $16,020.00 2023 $12,816.00 BBC 11 Depreciation cost per hour =(Cost of machine - Salvage Value) / Total Machine Hours =(B1-B2) B3 $1.01 13 14 15 Activity for 2022 500 hours 16 Depreciation cost per hour 17 Depreciation for 2022 18 =Activity Hours =B15*B13 $505.00

DE А. 1 Cost of machine 2 Salvage Value 3 Machine Hours 4 Life of Asset 5 Purchased on 80100 7380 72000 10 Year Period 44926 1 45291 2 45657 3 460224 44571 Decling Balance Method Depreciation =DDB($B$1,$B$2.$B$4.E3,2) =DDB($B$1,$B$2.$B$4.E4,2) =DDB($B$1,$B$2.$B$4, E5,2) =DDB($B$1,$B$2.$B$4 E6,2) =DDB($B$1,$B$2.$B$4, E7,2) =DDB($B$1,$B$2.$B$4 E8,2) =DDB($B$1 $B$2.$B$4 E9,2) =DDB($B$1.$B$2.$B$4E10.2) =DDB($B$1,$B$2.$B$4,E11,2) =DDB($B$1.$B$2.$B$4,E12,2) 7 8 9 Declining Balance Depreciation =F3 463875 467526 Book Value =B1-F3 =G3-F4 =G4-F5 =G5-F6 =G6-F7 =G7-F8 =G8-F9 =G9-F10 =G10-F11 =G11-F12 2022 2023 =F4 47118 17 474838 47848 9 48213 10 11 Depreciation cost per hour 12 =(B1-B2) B3 =(B1-B2)/B3 13 14 15 Activity for 2022 500 hours 16 17 Depreciation for 2022 Depreciation cost per hour =Activity Hours =B15*B13 =B15*B13

Calculation of Double Declining Balance manually

L M N 1 Straight line 2 Depreciation Expense =(Cost of Machine - Salvage Value) / Life of Asset =(B1-B2/B4 7272 6 Depreciation Rate =Depreciation Expense / (Cost of Machine - Salvage Value) =J4/(B1-B2) 10.00% 9 Decling Balance Method 20% Year Period 12 13 Decling Balance Method ok Value Form Book Value =B1 $80,100.00 =L13-N13 $64,080.00 =L14-N14 $51,264.00 =L 15-N15 $41,011.20 =L16-N16 $32,808.96 =L 17-N17 $26,247.17 =L18-N18 $20.997.73 EL 19-N19 $16,798.19 =L20-N20 $13,438.55 =L21-N21 $10.750.84 12/31/2022 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2029 12/31/2030 12/31/2031 preciation Forn Depreciation =K13*$J$9 $16,020.00 =K14*$J$9 $12,816.00 =K15*$J$9 $10.252.80 =K16*$J$9 $8,202.24 =K17*$J$9 $6,561.79 =K18*$J$9 $5,249.43 =K19*$J$9 $4.199.55 =K20*$J$9 $3,359.64 =K21*$J$9 $2,687.71 =K22*$J$9 $2,150.17 18 22 1 23

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