On January 1, 2016, Hobart Mfg. Co. purchased a drill press at a cost of $52,400
ID: 2493961 • Letter: O
Question
On January 1, 2016, Hobart Mfg. Co. purchased a drill press at a cost of $52,400. The drill press is expected to last 10 years and has a residual value of $6,800. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2016 and 2017, 29,000 and 92,000 units, respectively, were produced.
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the straight-line method is used.
Depreciation = 2016 2017
Book Values =2016 2017
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the double-declining-balance method is used.
Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31, 2016 and 2017, assuming the units-of-production method is used. (Round depreciation per unit to 2 decimal places.)
Explanation / Answer
method 1 :Straight line method
Depreciation = (cost -salvage value)/useful life
= (52400 -6800)/ 10
= 45600/10
= $ 4560 per year
Depreciation :
method 2:units-of-production method
Depreciation rate per unit =(cost -salvage) /useful life in units
= (52400-6800 ) / 500000
= 45600 / 500000
= $ .09 per unit
method : 3 double-declining-balance method
Depreciation rate = 2 /useful life
= 2/ 10 = .20 or 20%
year Depreciation Book value 2016 4560 52400- 4560 = 47840 2017 4560 47840- 4560 = 43280Related Questions
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