Exercise 11-5 Shamrock Corporation purchased a new machine for its assembly proc

Question

Exercise 11-5 Shamrock Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $162,702. The company estimated that the machine would have a salvage value of $17,802 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31 Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to 0 decimal places,e.g. 45,892. (a) (b) (c) (d) Straight-line depreciation for 2017 Activity method for 2017, assuming that machine usage was 800 hours Sum-of-the-years'-digits for 2018 Double-declining-balance for 2018 $

Explanation / Answer

a) Straight line depreciation ( cost - salvage value)/useful life (162,702-17802)/5 28980 dep for five months 28,980*5/12 12075 answer b) Activity method depreciation rate = (162702-17802)/21000 6.9 Depreciation expense = 6.9*800 5520 answer c) sum of years digit n*(n+1)/2 15 depreciation = (162702-17802)*5/15 48300 48300*5/12 20125 answer d) Double decling rate = 1/5*2 0.4 depreciation expense = 162702*40%*5/12 27117 answer

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