On January 1, 2018, a machine was purchased for $112,500. The machine has an estimated salvage value of $7,200 and an estimated useful life of 5 years. The machine can operate for 117,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 23,400 hrs; 2019, 29,250 hrs; 2020, 17,550 hrs; 2021, 35,100 hrs; and 2022, 11,700 hrs. Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset's life applying each of the following methods. (Round answers to 0 decimal places, e.g. 45,892.) Straight-line Method Year 2018 2019 2020 2021 2022 2023 $ Sum-of-the-years'-digits method $ Double-declining-balance method $
On January 1, 2018, a machine was purchased for $112,500. The machine has an estimated salvage value of $7,200 and an estimated useful life of 5 years. The machine can operate for 117,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 23,400 hrs; 2019, 29,250 hrs; 2020, 17,550 hrs; 2021, 35,100 hrs; and 2022, 11,700 hrs. Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset's life applying each of the following methods. (Round answers to 0 decimal places, e.g. 45,892.) Straight-line Method Year 2018 2019 2020 2021 2022 2023 $ Sum-of-the-years'-digits method $ Double-declining-balance method $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:On January 1, 2018, a machine was purchased for $112,500. The machine has an estimated salvage value of $7,200 and an estimated
useful life of 5 years. The machine can operate for 117,000 hours before it needs to be replaced. The company closed its books on
December 31 and operates the machine as follows: 2018, 23,400 hrs; 2019, 29,250 hrs; 2020, 17,550 hrs; 2021, 35,100 hrs; and 2022,
11,700 hrs.
Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset's life applying each of the
following methods. (Round answers to 0 decimal places, e.g. 45,892.)
Year
2018
2019
2020
2021
2022
2023
Straight-line Method
$
Sum-of-the-years'-digits method
$
Double-declining-balance method
$
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