Question 1 Nash Company purchased machinery tor 147000 on Ja

Question 1 Nash Company purchased machinery tor $147,000 on January 1, 2017. It is estimated that the machinery will have a useful lite of 20 years, salvage value ot $14,700, production of 81,900 units, and working hours of 38,400. During 2017, the company uses the machinery for 14,592 hours, and the machinery produces 18,837 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-digitss Double-dedlining-balance

Solution

Depreciation Straight Line $    6,615 Units of output $ 30,429 Working hours $ 50,274 Sum of years digit method $ 12,600 Double declinig balance $ 14,700 Workings: .Depreciation under straight line Depreciation expenses = (Cost-Salvage value)/useful life = (147000-14700)/20 = $        6,615 b.Depreciation under units of output Depreciation per unit = Depreciable value/total units of output = (147000-14700)/81900 = $   1.61538 Depreciation expenses for the year = Output for the year * Depreciation per unit =        18,837 x $ 1.61538 = $    30,429 c.Depreciation under working hours Depreciation per hours = Depreciable value/total working hours = (147000-14700)/38400 = $   3.44531 Depreciation expenses for the year = Working hours*Depreciation hours per unit =        14,592 x $ 3.44531 = $    50,274 d. Depreciation under sum of year digit method Depreciation expenses for the First Year = (Depreciable value/Sum of years digit)*Digit of last year = ((147000-14700)/(1+2+3+4+5+6+7+8+9+10+11+12+13+14+15+16+17+18+19+20))*20 = $    12,600 e. Depreciation under double declining method Straight Line Rate = 1/20 = 5% Double declining rate = 5% x 2 = 10% Depreciation schedule Years Beginning Book Value Depreciation expenses Ending Boook Value a b=a*10% a-b 1 $ 1,47,000 $      14,700 $ 1,32,300