Question

Question 3 View Policies Current Attempt in Progress Crane Corp, purchased machinery for $312,150 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $15,150, production of 237.600 units, and working hours of 25,000. During 2021, Crane Corp. uses the machinery for 2,650 hours, and the machinery produces 25,700 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 (b) Units of output c) Working hours (d) Sum-of-the-years digits le) Declining-balance (use 20% as the annual rate) $

Answer 1

Depreciation charge for 2021

a) Straight line = $29700

b) Units of output = $32125

c) Working hours = $31482

d) Sum of the year digits = $50400

e) Declining balance = $54106

Notes

a) Annual Depreciation expense = ((312150-15150)/10) = 29700

b) Depreciation expense per unit = (312150-15150)/(237600) = $1.25

Depreciation for 2021 = 1.25*25700 =

c)

Depreciation expense per hour = (312150-15150)/(25000) = $11.88

Depreciation for 2021 = 11.88*2650 = $31482

d) Depreciation expense = (312150-15150)*17% = $50400

Useful life = 1+2+3+4+5+6+7+8+9+10 = 55

Period remaining as a percentage of useful life = 9.3

e) Declining balance =

Depreciation in 2020 = (312150)*20%*8/12 = $41620

WDV in 2020 = 270530

Depreciation in 2021 = 270530*20% = $54106

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