**With an explnation / how to do it please The cost of equipment purchased by Wh
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**With an explnation / how to do it please
The cost of equipment purchased by Whispering, Inc., on June 1, 2017, is $91,670. It is estimated that the machine will have a $5,150 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 43,260, and its total production is estimated at 540,750 units. During 2017, the machine was operated 6,180 hours and produced 56,650 units. During 2018, the machine was operated 5,665 hours and produced 49,440 units. Compute depreciation expense on the machine for the year ending December 31, 2017, and the year ending December 31, 2018, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to o decimal places, e.g. 45,892.) 2017 2018 (a) Straight-line (b) Units-of-output (c) Working hours (d) Sum-of-the-years'-digits (e) Double-declining-balance (twice the straight-line rate)Explanation / Answer
Straight Line Method Dep Depreciation as per SLM mthod = (Cost of the machine - residual Value)/useful life Dep for Year 2017 =[91670-5150]/7yrs =$12360 Dep for Year 2018 = $12360 Unit of Output Depreciation cost = (Cost of the machine - residual Value)/total no of units in 7 year =[91670-5150]/ 540750 units $ 0.16/unit Deprciation for year 2017 = depreciation per unit * total no of unit produced in yr 1 =$ 0.16*56650 units $9,064 Dep for 2018 = $0.16*49440 units $7,430 Working Hrs Depreciation cost = (Cost of the machine - residual Value)/total hrs worked in 20 year =[91670-5150]/ 43260 hrs = $2/hr Deprciation for year 2017= depreciation per hr * total no of hrs worked in yr 2017 = $2*6180 hrs $12,360 Dep for 2018 = $2/hr *5665 hrs $11,330 Sum of years digit formula Sum of all the years = n(n+1)/2 =7(7+1)/2 = 28 Depreciation for year 2017 = Purchase Cost - Salvage Value * 1/sum of useful lyf =[91670-5150]*7/28 21630 Dep for 2018 = (91670-5150)*6/28 18540 Double Declining balance method Depreciation factor is equal to 2 since it is double declining Dep rate using SLM =100%/useful life = 100%/7 = 14.285% Depreciation Rate = Depreciation Factor x Straight-Line Depreciation Percent =2*14.285% = 28.57% Depreciation for 2017 = Depreciation Rate x Book Value at Beginning of the Period*7months/12months = 28.57%*91670*7/12 $ 15,277.57 Depfor 2018 = 28.57%*(91670-15277) $ 21,825.32
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