Ivanhoe Ltd. purchased a new machine on April 4, 2017, at a cost of $188,000. The company estimated that the machine would have a residual value of $16,000. The machine is expected to be used for 10,750 working hours during its four-year life. Actual machine usage was 1,600 hours in 2017; 2,100 hours in 2018; 2,300 hours in 2019; 2,100 hours in 2020; and 1,700 hours in 2021. Ivanhoe has a December 31 year end. Calculate depreciation for the machine under each of the following methods: Round expense per unit to 2 decimal places (1) Straight-line for 2017 through to 2021. 2017 expense $enter a dollar amount 2018 expense $enter a dollar amount 2019 expense $enter a dollar amount 2020 expense $enter a dollar amount 2021 expense $enter a dollar amount (2) Diminishing-balance using double the straight-line rate for 2017 through to 2021. 2017 expense $enter a dollar amount 2018 expense $enter a dollar amount 2019 expense $enter a dollar amount 2020 expense $enter a dollar amount 2021 expense $enter a dollar amount (3) Units-of-production for 2017 through to 2021. 2017 expense $enter a dollar amount 2018 expense $enter a dollar amount 2019 expense $enter a dollar amount 2020 expense $enter a dollar amount 2021 expense $enter a dollar amount
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.
Ivanhoe Ltd. purchased a new machine on April 4, 2017, at a cost of $188,000. The company estimated that the machine would have a residual value of $16,000. The machine is expected to be used for 10,750 working hours during its four-year life. Actual machine usage was 1,600 hours in 2017; 2,100 hours in 2018; 2,300 hours in 2019; 2,100 hours in 2020; and 1,700 hours in 2021. Ivanhoe has a December 31 year end.
Calculate
(1) Straight-line for 2017 through to 2021.
|
2017 expense
|
$enter a dollar amount | ||
|---|---|---|---|
|
2018 expense
|
$enter a dollar amount | ||
|
2019 expense
|
$enter a dollar amount | ||
|
2020 expense
|
$enter a dollar amount | ||
|
2021 expense
|
$enter a dollar amount |
(2) Diminishing-balance using double the straight-line rate for 2017 through to 2021.
|
2017 expense
|
$enter a dollar amount | ||
|---|---|---|---|
|
2018 expense
|
$enter a dollar amount | ||
|
2019 expense
|
$enter a dollar amount | ||
|
2020 expense
|
$enter a dollar amount | ||
|
2021 expense
|
$enter a dollar amount |
(3) Units-of-production for 2017 through to 2021.
|
2017 expense
|
$enter a dollar amount | ||
|---|---|---|---|
|
2018 expense
|
$enter a dollar amount | ||
|
2019 expense
|
$enter a dollar amount | ||
|
2020 expense
|
$enter a dollar amount | ||
|
2021 expense
|
$enter a dollar amount |
Step by step
Solved in 2 steps
