Bonita Corporation purchased a new machine for its assembly process on August 1,

Question

Bonita Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $157,986. The company estimated that the machine would have a salvage value of $17,286 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 20,300 hours. Year-end is December 31.

Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to 0 decimal places, e.g. 45,892.)

(a) Straight-line depreciation for 2017 $

(b) Activity method for 2017, assuming that machine usage was 810 hours $

(c) Sum-of-the-years'-digits for 2018 $

(d) Double-declining-balance for 2018 $

Explanation / Answer

a) Straight line dep = (157986-17286/5) = 28140 per year

2017 Depreciation = 28140*5/12 = 11725

b) Activity method dep = (157986-17286/20300) = 6.93 per hour

2017 Depreciation = 810*6.93 = 5613

c) Sum of year digit = 5+4+3+2+1 = 15

Depreciable base = 157986-17286 = 140700

2018 Dep = (140700*5/15*7/12)+(140700*4/15*5/12) = 42992

e) Double decline dep for 2018 = (157986*40%*7/12+157986*60%*40%*5/12) = 52662

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---