3 Dersch Co purchased a machine on January 1 2014 for 150000

3. Dersch Co. purchased a machine on January 1, 2014, for $1,500,000. Using the table below, calculate the annual depreciation expense for each year of the machine\'s life (estimatedat 5 years or 50,000 hours with a residual value of $150,000). During the machine\'s life it was used 15,000; 14,000; 10,000; 9,000; and 6,000 hours. Year 2014 2015 2016 2017 2018 Straight-line Units-of-production Double-declining balance s e P

Solution

Depreciation schedule :

Depreciation per unit = (1500000-150000/50000) = 27 per hour

Double decline rate = 100/5*2 = 40%

	Straight line	Unit of production	Double declining balance
2014	(1500000-150000/5) = 270000	15000*27 = 405000	1500000*40% = 600000
2015	270000	14000*27 = 378000	1500000*60%*40% = 360000
2016	270000	10000*27 = 270000	1500000*60%*60%*40% = 216000
2017	270000	9000*27 = 243000	1500000*60%*60%*60%*40% = 129600
2018	270000	2000*27 = 54000	1350000-1305600 = 44400