3. Sketches Inc purchased a machine on January 1, 2016. The cost of the machine
ID: 2400926 • Letter: 3
Question
3. Sketches Inc purchased a machine on January 1, 2016. The cost of the machine was $39,500. Its estmated residual value was $12,500 at the end of an estimated 5-year life. The company expects to produce a total of 10,000 units. The company produced 1,450 units in 2016 and 1,900 units in 2017 a. Calculate depreciation expense for 2018 and 2017 using the straight-ine method b Calculate the depreciation expense for 2018 and 2017 using the units-of-production method. (Do not round your intermediate calculations Round your final answers to the nearest whole dollar) Expense C. Calculate deprecation expense for 2010 through 2020 using the double decining balance method. (Round your final answer to nearest dollar valueExplanation / Answer
1
A.) Calculate depreciation expense for 2016 and 2017 using straight line method.
Depreciation rate under Straight Line Method
=Cost-salvage value/ life of the Asstes
=39500-12500/5
=5400 depreciation each year
2016
2017
Depreciation Expanses
5400
5400
__________________________________________________________________________
B.)Calculate depreciation expense for 2016 and 2017 using units of production method.
Depreciation rate under Straight Line Method
=Cost-salvage value/ Unit produced during the life of assets
=39500-12500/10,000 units
=$2.7 deprecation per unit
Year
Unit
produced
Rate of
Depreciation
Annual Dep
A
B
C=A*B
1
1450
2.7
3915
2
1900
2.7
5130
2016
2017
Depreciation Expanses
3915
5130
______________________________________________________________________
C.)
Calculate depreciation expense for 2016 through 2020 the using double declining balance method.
Depreciation rate under Straight Line Method= 1/ 5 years=20%
Depreciation rate under (DDB) Double decline Method
= 2 x Depreciation rate under Straight Line Method
=2 x 20
=40%
Double Declining Method
Year
Book Value of Beg yr
Dep Rate
=
Annual Dep
Accumulated
Depreciation
Book Value
A
B
C=A*B
A-C
1
39,500
40.00%
=
15800
15800
23,700
2
23,700
40.00%
=
9480
25280
14,220
3
14,220
=
1,720
27000
12,500
4
12,500
=
0
27000
12,500
5
12,500
=
0
27000
12,500
2016
2017
2018
2019
2020
Depreciation Expanses
15,800
9480
1,720
0
0
2016
2017
Depreciation Expanses
5400
5400
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.