Vaughn Company purchased machinery for 172200 on January 1 2

Vaughn 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 78,900 units, and working hours of 39,500. During 2017, the company uses the machinery for 12,245 hours, and the machinery produces 12,624 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.)

Solution

Calculate depreciation expense :

a) Straight line = (172200-14700/20) = $7875

b) Unit of output = (172200-14700/78900)*12624 = $25200

c) Working hours = (172200-14700/39500)*12245 = $48825

d) Sum of year digit = (172200-14700)*20/210 = $15000

e) Double declining balance = 172200*10% = $17220