Cullumber Ltd. purchased a new machine on April 4, 2017, at a cost of $184,000. The company estimated that the machine would have a residual value of $16,000. The machine is expected to be used for 10,000 working hours during its four-year life. Actual machine usage was 1.500 hours in 2017; 2,400 hours in 2018: 2,000 hours in 2019, 2.200 hours in 2020; and 1,900 hours in 2021. Cullumber has a December 31 year end
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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![Cullumber Ltd. purchased a new machine on April 4, 2017, at a cost of $184,000. The company estimated that the machine would have
a residual value of $16,000. The machine is expected to be used for 10,000 working hours during its four-year life. Actual machine
usage was 1.500 hours in 2017: 2,400 hours in 2018: 2,000 hours in 2019, 2.200 hours in 2020; and 1,900 hours in 2021. Cullumber
has a December 31 year end](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa880cc3d-71b2-44bc-9eb8-ccb18aa2c0ed%2Fbb6e0123-e8a1-422f-9a8c-7c26b7a69abf%2F48fvs8q_processed.jpeg&w=3840&q=75)
![Calculate depreciation for the machine under each of the following methods: (Round expense per unit to 2 decimal places, eg 2.75
and final answers to O decimal places, eg. 5,275)
(1) Straight-line for 2017 through to 2021.
2017 expense $
2018 expense $
2019 expense $
2020 expense
2021 expense
(2) Diminishing-balance using double the straight-line rate for 2017 through to 2021.
2018 expense
2017 expense $
2019 expense
2020 expense
2021 expense
S
2018 expense
$
2019 expense
2020 expense
5001 mense
$
(3) Units-of-production for 2017 through to 2021.
$
2017 expense $
S
$
$
$
S
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa880cc3d-71b2-44bc-9eb8-ccb18aa2c0ed%2Fbb6e0123-e8a1-422f-9a8c-7c26b7a69abf%2F3scsp4_processed.jpeg&w=3840&q=75)
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