Exercise 9-5 Crane Company purchased a new machine on October 1, 2017, at a cost

Question

Exercise 9-5 Crane Company purchased a new machine on October 1, 2017, at a cost of $90,080. The company estimated that the machine has a salvage value of $8,560. The machine is expected to be used for 71,400 working hours during its 8-year life Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end. (Round answers to O decimal places, e.g 5,275.) Compute the depreciaton expense under the straight-int method for 2017 2018 The depreciation expense under the straight-line methods

Explanation / Answer

Annual depreciation expense=(Cost-Residual value)/Useful Life

=(90080-8560)/8

=$10190/year

Hence depreciation expense for 2017 would be for the period October 1-December 31(ie 3 months).

2017 2018 depreciation expense under straight line method (10190*3/12)=$2548(Approx) $10190

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