On January 1, 2016, Kristen Company purchased for $180,000 a new machine that ha
ID: 2342999 • Letter: O
Question
On January 1, 2016, Kristen Company purchased for $180,000 a new machine that has an estimated useful life of ten years (or 550,000 stamping operations), after which the expected salvage value is $10,000. Under each of the following depreciation methods, calculate the depreciation expense for 2016.
Required:
a.
Straight line depreciation
b.
Double declining balance depreciation
c.
Units of production depreciation, if 66,000 stamping operations were made in 2016
a.
Straight line depreciation
b.
Double declining balance depreciation
c.
Units of production depreciation, if 66,000 stamping operations were made in 2016
Explanation / Answer
1.
SLM Depreciation = (180000-10000)/10 = 17000 each year
2.
Year 1 20%*180000 = 36000
Year 2 20%*144000 = 28800
Year 3 20%*115200 = 23040
Year 4 20%*92160 = 18432
Year 5 20%*73728 = 14746
Year 6 and so on ........
3.
Total Units = 550000
Units consumed = 66000
Depreciation = [(180000-10000)/550000]*66000 = 20400
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