Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates: Service life 5 years or 10,000 hours Production 180,000 units Residual value $ 18,000 In 2019, Gruman uses the machine for 1,700 hours and produces 50,000 units. In 2020, Gruman uses the machine for 1,200 hours and produces 34,000 units. If required, round your final answers to the nearest dollar. If Gruman used a service life of 8 years or 15,000 hours and a residual value of $9,000 , what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance depreciation methods? Depreciation expense Straight-line method 2019 $ fill in the blank 21 2020 $ fill in the blank 22 Sum-of-the-years'-digits method 2019 $ fill in the blank 23 2020 $ fill in the blank 24 Double-declining-balance method 2019 $ fill in the blank 25 2020 $ fill in the blank 26 Book value Straight-line method 2019 $ fill in the blank 27 2020 $ fill in the blank 28 Sum-of-the-years'-digits method 2019 $ fill in the blank 29 2020 $ fill in the blank 30 Double-declining-balance method 2019 $ fill in the blank 31 2020 $ fill in the blank 32
Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates: Service life 5 years or 10,000 hours Production 180,000 units Residual value $ 18,000 In 2019, Gruman uses the machine for 1,700 hours and produces 50,000 units. In 2020, Gruman uses the machine for 1,200 hours and produces 34,000 units. If required, round your final answers to the nearest dollar. If Gruman used a service life of 8 years or 15,000 hours and a residual value of $9,000 , what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance depreciation methods? Depreciation expense Straight-line method 2019 $ fill in the blank 21 2020 $ fill in the blank 22 Sum-of-the-years'-digits method 2019 $ fill in the blank 23 2020 $ fill in the blank 24 Double-declining-balance method 2019 $ fill in the blank 25 2020 $ fill in the blank 26 Book value Straight-line method 2019 $ fill in the blank 27 2020 $ fill in the blank 28 Sum-of-the-years'-digits method 2019 $ fill in the blank 29 2020 $ fill in the blank 30 Double-declining-balance method 2019 $ fill in the blank 31 2020 $ fill in the blank 32
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates:
| Service life | 5 years or 10,000 hours |
| Production | 180,000 units |
| Residual value | $ 18,000 |
In 2019, Gruman uses the machine for 1,700 hours and produces 50,000 units. In 2020, Gruman uses the machine for 1,200 hours and produces 34,000 units. If required, round your final answers to the nearest dollar.
- If Gruman used a service life of 8 years or 15,000 hours and a residual value of $9,000 , what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance
depreciation methods?
Depreciation expense
- Straight-line method
2019 $ fill in the blank 21 2020 $ fill in the blank 22 - Sum-of-the-years'-digits method
2019 $ fill in the blank 23 2020 $ fill in the blank 24 - Double-declining-balance method
2019 $ fill in the blank 25 2020 $ fill in the blank 26
Book value
- Straight-line method
2019 $ fill in the blank 27 2020 $ fill in the blank 28 - Sum-of-the-years'-digits method
2019 $ fill in the blank 29 2020 $ fill in the blank 30 - Double-declining-balance method
2019 $ fill in the blank 31 2020 $ fill in the blank 32
Expert Solution
Step 1
Depreciation means the loss in value of assets because of usage of assets , passage of time or change in technology.
Depreciation can not be charged in books of account until the fixed asset is ready to use.
Straight line method means where same amount of depreciation is charged every year.
Under declining balance method using twice the straight line rate , we need to calculate the percentage of depreciation to be charged.
In sum of year digits method , depreciation is calculated by dividing the sum of year of life and multiply with number of years of life remaining.
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