How do I figure out the depreciation amount for the sum of the years digit method
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Depreciation Methods
Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following estimates:
Service life
5 years or 10,000 hours
Production
180,000 units
Residual value
$ 18,000
In 2016, Gruman uses the machine for 1,700 hours and produces 50,000 units. In 2017, Gruman uses the machine for 1,400 hours and produces
30,000 units. If required, round your final answers to the nearest dollar.
Required:
1. Compute the depreciation for 2016 and 2017 under each of the following methods:
a. Straight-line method
2016 $
36,000 v
2017 $
36,000
b. Sum-of-the-years'-digits method
2016 $
2017 $
c. Double-declining-balance method
2016 $
79,200
2017 $
47,520
d. Activity method based on hours worked
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Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video
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