Blue Corporation purchased a new machine for its assembly pr

Blue Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $167,418. The company estimated that the machine would have a salvage value of $18,318 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 19,500 hours. Year-end is December 31.

Secure https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni ACTG3110-001 / Ch 11 Exercises Exercise 11-5 Blue Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $167,418. The company estimated that the machine would have a salvage value of $18,318 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 19,500 hours. Year-end is December 31 Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g.5.35 for computational purposes. Round your answers to O decimal places, e.g. 45,892.) 29820 s (a) Straight-line depreciation for 2017 (b) Activity method for 2017, assuming that machine usage was 830 hours6346 (c) Sum-of-the-years\'-digits for 2018 (d) Double-declining-balance for 2018 45558 Question Attempts: 0 of 3 used

Solution

(a) Straight Line Depreciation for 2017

$12,425

(b) Activity Method Depreciation for 2017

$6,346

(c) Sum of the years digits for 2018

$45,558

(d) Double Declining Balance for 2018

$55,806     

(a) Straight Line Depreciation for 2017

= [(Cost – Salvage Value) / Useful life] x Month Proportion Factor

= [($167,418 – 18,318) / 5 Years] x 5 Month/12 Month

= $12,425

(b) Activity Method Depreciation for 2017

= [(Cost – Salvage Value) / Total Estimated Hours] x Machine Usage hours

= [($167,418 – 18,318) / 19,500] x 830

= $6,346

(c) Sum of the years digits for 2018

2017 Depreciation = ($167,418 – 18,318) x 5/15 x 5/12 = $20,708

2018 Depreciation = ($167,418 – 20,708) x 31% = $45,558

(d) Double Declining Balance for 2018

Depreciation Expense = Beginning Balance x 2 x Straight Line Depreciation Rate

Straight Line Depreciation Rate = 1 / Useful Life = 1 / 5 = 0.20

Depreciation, 2017 = [$167,418 x 2x 0.20] x 5/12 = $27,903

Depreciation, 2018 = [$167,418 – 27,903] x 2 x 0.20 = $55,806    

(a) Straight Line Depreciation for 2017	$12,425
(b) Activity Method Depreciation for 2017	$6,346
(c) Sum of the years digits for 2018	$45,558
(d) Double Declining Balance for 2018	$55,806