Depreciation Methods On January 2 Javier Company purchased an electroplating machine to help manufacture a part for one of its key products. The machine cost $437,400 and was estimated to have a useful life of six years or 781,200 platings, after which it could be sold for $46,800. Required: a) Calculate each year's depreciation expense for the period under each of the following depreciation methods: Straight-line. Double-declining balance. Units-of-production. (Assume annual production in platings of 140,000; 180,000; 150,000; 125,000; 95,000; and 91,200.) b) Assume that the machine was purchased on September 1. Calculate each year's depreciation expense for the period under each of the following depreciation methods: Straight-line. Double-declining balance.
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.
P9-3B)
Required:
a) Calculate each year's depreciation expense for the period under each of the following depreciation methods:
- Straight-line.
- Double-declining balance.
- Units-of-production. (Assume annual production in platings of 140,000; 180,000; 150,000; 125,000; 95,000; and 91,200.)
b) Assume that the machine was purchased on September 1. Calculate each year's depreciation expense for the period under each of the following depreciation methods:
- Straight-line.
- Double-declining balance.
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