Zebre industries purchased a machine for $192,000 on Jan. 1, 1994. Zebre expects
ID: 2451566 • Letter: Z
Question
Zebre industries purchased a machine for $192,000 on Jan. 1, 1994. Zebre expects to use the machine for 6 years, at which time its estimated salvage value will be $21,900. Production from the machine is budgeted at a total of 150,000 units, allocated to each year as follows:1994, 25000 units; 1995, 30,000 units, 1996, 35,000 units; 1997, 30,000, 1998, 20,000 units; 1999, 10,000 units.
Required:
1. Calculate the amount of depreciation in each of th years using each of the following methods: 1. the straight line method 2. the unit-of-output method 3. the sum-of-the-years digits 4. the double declining balance.
(SHOW WORKS)
Explanation / Answer
Cost of Assets $ 192,000.00 Salvage value $ 21,900.00 Depreciable base $ 170,100.00 Calculation of depreciation 1. SLM 1994 1995 1996 1997 1998 1999 Depreciation = 170100/6 $ 28,350.00 $ 28,350.00 $ 28,350.00 $ 28,350.00 $ 28,350.00 $ 28,350.00 2. Units of Output method 1994 1995 1996 1997 1998 1999 Total Production (Units) 25000 30000 35000 30000 20000 10000 150000 Depreciation $ 28,350.00 $ 34,020.00 $ 39,690.00 $ 34,020.00 $ 22,680.00 $ 11,340.00 $ 170,100.00 3. Sum of years digit method 1994 1995 1996 1997 1998 1999 Remaining useful life 6 5 4 3 2 1 Some of years digit 21 21 21 21 21 21 Depreciable base $ 170,100.00 $ 170,100.00 $ 170,100.00 $ 170,100.00 $ 170,100.00 $ 170,100.00 SYD Depreciation $ 48,600.00 $ 40,500.00 $ 32,400.00 $ 24,300.00 $ 16,200.00 $ 8,100.00 =6*(6+1)/2 = 21 4. Double declining balance 1994 1995 1996 1997 1998 1999 Book value beginning of the year $ 192,000.00 $ 128,000.00 $ 85,333.33 $ 56,888.89 $ 37,925.93 $ 25,283.95 SLM rate 16.67% 16.67% 16.67% 16.67% 16.67% 16.67% DDB Depreciation $ 64,000.00 $ 42,666.67 $ 28,444.44 $ 18,962.96 $ 12,641.98 $ 8,427.98
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