Merrik\'s Derrick\'s acquired a large piece of a large piece of equipment on Jan

Question

Merrik's Derrick's acquired a large piece of a large piece of equipment on Jan. 1, 1995, for $1,920,000 . The equipment is estimated to have a useful life of 5 years and a salvage value of $120,000 . Merrick expects to be able to use the equipment for 10,000 hours before it is worn out I. was used for 4,000 hours in 1995 and 2,350 hours in 1996. Calculate depreciation for 1995 and 1996 using each of the following methods straight line, Units-of outputs method, sum- of the years digits, )d double declining balance.

Explanation / Answer

Calculation of the depreciation Cost 1920000 Useful Life 5 Years Salvage Value 120000 Straight Line Method Depreciation per year 1920000-120000/5 360000 per year 1995 360000 Depreciation 1996 360000 Depreciation Units of output method 1920000-120000/10000 180 per hour 1995 180*4000 720000 Depreciation 1996 180*2350 423000 Depreciation Sum of years digit method Total 5+4+3+2+1 15 1920000-120000/15 1995 120000*5 600000 Depreciation 1996 120000*4 480000 Depreciation

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