Robert Parish Corporation purchased a new machine for its assembly process on Au

Question

Robert Parish Corporation purchased a new machine for its assembly process on August 1, 2014. The cost of this machine was $130,869. The company estimated that the machine would have a salvage value of $14,319 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 20,200 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 O decimal places, e.g. 45,892.) Straight-line depreciation for 2014 Activity method for 2014, assuming that machine usage was 860 hours Sum-of-the-years'-digits for 2015 Double-declining-balance for 2015 Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Straight line depreciation for 2014 => (130869 - 14319)/ 5 =>

Depreciation expense => $23310 * 5/12 => $9712.5

Activity method for 2014, assuming that machine usage was 860 hours

Depreciation per hour=> (130869 - 14319 ) / 20200 => $5.77 per hour

Depreciation expense => $860 * 5.77 => $4962.2

Sum of the year digits for 2015

Deprecaition expense => (130869 - 14319) * 4/15 => $31080

Double Declining Balance Method

If useful life is 5 yrs, straight-line rate is 20%, so DDB rate is 40%

Deprecation in 2014 => (130869 * 40% *5/12) => $21811.5

Book VAlue at end 2014 => 130869 - 21811.5 => $109057.5

Deprecation in 2015 => (109057.5 * 40%) => 43623

Double Declining Balance Method => $43623

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