On January 1,201s, the Allegheny Corporation purchased machinery for $160,.000,
ID: 2398689 • Letter: O
Question
On January 1,201s, the Allegheny Corporation purchased machinery for $160,.000, The estimated service life of the machinery is to years and the estimated residual value is $17000. The machine is expected to produce 260,000 units during its life. Required Calculate depreciation for 2018 and 2019 using each of the following methods. . Straight line. 2. Sum-of-the-years'-digits. 3. Double-declining balance. 4. One hundred fifty percent declining balance. 5. Units of production (units produced in 2018, 39,000; units produced in 2019, 34,000). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Calculate depreciation for 2018 and 2019 using sum-of-the-years' digits Sum-of-the-years' digits depreciation Depreciable x Year Rate per Depreciation Expense Base 2018 2019 ? Required 1 Required 3>Explanation / Answer
1. Straight Line Depreciation: ($160,000-$17000)/10 = $ 14300 for 2018 and 2019
2. Sum of years Digit Method: 1+2+3+4+5+6+7+8+9+10 = 55
Therefore for 1st year, depreciation would be 10/55x143,000 = $ 26000
For 2nd year, dep would be 9/55x$143,000 = $ 23400
3. Double-declining balance.
2018- depreciation for the period:
beginning of period book value= $160000
Depreciation rate= 2 * 100/10% = 20%
depreciation expense= $160000 * 20% = $32000
2019- depreciation for the period:
begnning of period book value= $160000 - $32000 = $128000
Depreciation rate= 20%
depreciation expense= 20%*$128000 = $25600
4. One hundred fifty percent declining balance.
2018- depreciation for the period:
beginning of period book value= $160000
Depreciation rate= 1.5 * 10% = 15%
depreciation expense= 15%*$160000 = $24000
2019- depreciation for the period:
beginning of period book value= $160000 - $24000 = $136000
Depreciation rate= 15%
depreciation expense= 15% * $136000 = $20400
5. Units of production (units produced in 2016, 39,000; units produced in 2017, 34,000). (Round "Depreciation per unit rate" answers to 2 decimal places.)
2018 depreciation expense:
depreciation per unit rate= ($160000 -$17000) / 260000 = .55 per unit
units produced in 2018= 39000
Depreciation in 2018= 39000 * $.55 = $21450
2019 depreciation expense:
depreciation per unit rate= $.55
units produced in 2019= 34000
Depreciation in 2019= 34000 * $.55 = $18700
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