Crane Company purchased machinery for 172200 on January 1 20

Crane Company purchased machinery for $172,200 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14,700, production of 87,900 units, and working hours of 43,500. During 2017, the company uses the machinery for 19,140 hours, and the machinery produces 25,491 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years’-digits, and double-declining-balance methods. (Round intermediate calculations to 5 decimal places, e.g. 1.56487 and final answers to 0 decimal places, e.g. 5,125.)

		Depreciation
Straight-line		$ $\"\"$
Units-of-output		$ $\"\"$
Working hours		$ $\"\"$
Sum-of-the-years’-digits		$ $\"\"$
Double-declining-balance		$ $\"\"$

Straight-line Method:

Cost of Machine = $172,200
Salvage Value = $14,700
Useful Life = 20 years

Annual Depreciation = (Cost of Machine - Salvage Value) / Useful Life
Annual Depreciation = ($172,200 - $14,700) / 20
Annual Depreciation = $7,875

Depreciation for 2017 = $7,875

Units-of-output:

Cost of Machine = $172,200
Salvage Value = $14,700
Expected number of output = 87,900

Depreciation per unit = (Cost of Machine - Salvage Value) / Expected number of output
Depreciation per unit = ($172,200 - $14,700) / 87,900
Depreciation per unit = $1.7918

Number of output produced in 2017 = 25,491 units

Depreciation for 2017 = $1.7918 * 25,491
Depreciation for 2017 = $45,675

Working Hours:

Cost of Machine = $172,200
Salvage Value = $14,700
Expected number of working hours = 43,500

Depreciation per working hour = (Cost of Machine - Salvage Value) / Expected number of working hour
Depreciation per working hour = ($172,200 - $14,700) / 43,500
Depreciation per working hour = $3.6207

Number of working hours in 2017 = 19,140

Depreciation for 2017 = $3.6207 * 19,140
Depreciation for 2017 = $69,300

Sum-of-the-years’ Method:

Sum of the Years = 1 + 2 + 3 + … + 20
Sum of the Years = 210

Depreciable Cost = Cost of Machine - Salvage Value
Depreciable Cost = $172,200 - $14,700
Depreciable Cost = $157,500

Depreciation for 2017 = $157,500 * 1/210
Depreciation for 2017 = $750

Double-declining Balance:

Straight-line Depreciation Rate = 1 / Useful Life
Straight-line Depreciation Rate = 1 / 20
Straight-line Depreciation Rate = 5%

Double Declining Depreciation Rate = 2 * Straight-line Depreciation Rate
Double Declining Depreciation Rate = 2 * 5%
Double Declining Depreciation Rate = 10%

Depreciation for 2017 = $172,200 * 10%
Depreciation for 2017 = $17,220

Crane Company purchased machinery for $172,200 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14

Crane Company purchased machinery for 172200 on January 1 20

Solution

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