Exercise 10-06 a-c Pronghorn Company purchased a new machine on October 1, 2020,
ID: 2328163 • Letter: E
Question
Exercise 10-06 a-c Pronghorn Company purchased a new machine on October 1, 2020, at a cost of $112,100. The company estimated that the machine will have a salvage value of $12,100. The machine is expected to be used for 10,000 working hours during its S-year life. Compute the depreciation expense under straight-line method for 2020. (Round answer to 0 decimal places, e.g. 2,125.) 2020 Deprediation expense Compute the depreciation expense under units-of-activity for 2020, assuming machine usage was 1,910 hours. (Round intermediate calculations to 1 decimal place, e.g.10.1 and final answer to 0 decimal places, e.g. 2,125) 2020 Depreciation expenses Compute the depreciation expense under declining-balance using double the straight-line rate for 2020 and 2021. (Round answers to o decimal places, e.g. 2,125.) 2020 2021 Depreciation expenseExplanation / Answer
Description Amount Cost of Machine 112,100 Salvage value 12,100 Depreciable amount 100,000 Solution A Life 5 years Straight line depreciation per year 100000/5 20,000 Since machine purchased on 1st Oct 2020 so depreciation will be chargd for 3 months Depreciation 20000*3/12 5,000 Solution B Total Activity in hours 10,000 Dep rate per hour 100000/10000 10 Machine usage in 2020 1,910 Depreciation 1910*10 19,100 Solution C SLM depreciation rate 20% Double declining rate 40% Depreciation for 2020 for 3 months =112100*40%*3/12 11,210 WDV for 2021 112100-11210 100,890 Depreciation for 2021 =100890*40% 40,356
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