Compute the depreciation expense under straightline method f

Compute the depreciation expense under straight-line method for 2017. (Round answer to 0 decimal places, e.g. 2,125.) 2017 Depreciation expense LINK TO TEXT Compute the depreciation expense under units-of-activity for 2017, assuming machine usage was 1,760 hours. (Round answer to O decimal places, e.g. 2017 Depreciation expense LINK TO TEXT Compute the depreciation expense under declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e 2017 2018 Depreciation expense

Solution

Answer a.

Cost of Machine = $130,000
Salvage Value = $10,000
Useful Life = 4 years

Annual Depreciation = (Cost of Machine - Salvage Value) / Useful Life
Annual Depreciation = ($130,000 - $10,000) / 4
Annual Depreciation = $30,000

Depreciation Expense for 2017 = $30,000

Answer b.

Cost of Machine = $130,000
Salvage Value = $10,000
Useful Life = 11,500 units

Depreciation per unit = (Cost of Machine - Salvage Value) / Useful Life
Depreciation per unit = ($130,000 - $10,000) / 11,500
Depreciation per unit = $10.435

Depreciation Expense for 2017 = Depreciation per unit * Machine usage in 2017
Depreciation Expense for 2017 = $10.435 * 1,760
Depreciation Expense for 2017 = $18,366

Answer b.

Straight-line Depreciation Rate = 1 / Useful Life
Straight-line Depreciation Rate = 1 / 4
Straight-line Depreciation Rate = 25%

Double-declining Depreciation Rate = 2 * Straight-line Depreciation Rate
Double-declining Depreciation Rate = 2 * 25%
Double-declining Depreciation Rate = 50%

Depreciation Expense for 2017 = $130,000 * 50%
Depreciation Expense for 2017 = $65,000

Book Value at the end of 2017 = $130,000 - $65,000
Book Value at the end of 2017 = $65,000

Depreciation Expense for 2018 = $65,000 * 50%
Depreciation Expense for 2018 = $32,500