Davis Machine Works purchased a stamping machine for $135,000 on February 1, 2012. The machine is expected to have a useful life of 10 years, a salvage value of $12,000, a production of 250,000 units, and number of working hours of 30,000. During 2012, Davis used the stamping machine for 2,450 hours 10 to produce 23,450 units. From the information given, compute the book depreciation expense for 2012 under each of the following methods:(a) Straight-line(b) Units of production( c) Working hours(d) Double-declining-balance (without conversion to straight-line depreciation)
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.
Davis Machine Works purchased a stamping machine for $135,000 on February 1, 2012. The machine is expected to have a useful life of 10 years, a salvage value of $12,000, a production of 250,000 units, and number of working hours of 30,000. During 2012, Davis used the stamping machine for 2,450 hours 10 to produce 23,450 units. From the information given, compute the book
(a) Straight-line
(b) Units of production
( c) Working hours
(d) Double-declining-balance (without conversion to straight-line depreciation)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
