On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $29,000

Question

On January 1, 2018, Hobart Mfg. Co. purchased a drill press at a cost of $29,000. The drill press is expected to last 10 years and has a residual value of $5,000. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2018 and 2019, 20,000 and 74,000 units, respectively, were produced. Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the double- declining-balance method is used. 2018 2019 Depreciation Book Values Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the sum-of- the-years -digits method is used. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) 2019 Depreciation Book Values Required: Compute depreciation for 2018 and 2019 and the book value of the drill press at December 31, 2018 and 2019, assuming the units-of- production method is used. (Round depreciation per unit to 2 decimal places.) 2018 2019 Depreciation Book Values

Explanation / Answer

1. Double decline balance method :

Straight line rate = 100/10 = 10%

Double decline rate = 20%

2. sum of year digit :

Sum of year digit = 10+9+8+7+6+5+4+3+2+1=55

3. unit of production dep :

Dep rate = 24000/500000 = 0.05

2018 2019 Depreciation 5800 4640 Book value 23200 18560

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---