Hours of Operation Depreciation Book Value $ Carlucci and Sons purchased a machi

Question

Hours of Operation

Depreciation

Book Value

$

Carlucci and Sons purchased a machine for $13,055 at the beginning of the year. Additional costs included $270 freight and $145 for installation. It was estimated that the machine could be operated for 30,000 hours, after which its resale value would be $570. Determine the straight-line depreciation based on hours of operation and the book value at the end of each of the first 7 years. If required, round your answers to two decimal places. Do not round depreciation per hour.Year

Hours of Operation

Depreciation

Book Value

1 2,850 $ $ 2 3,200 $ $ 3 3,350 $ $ 4 2,350 $ $ 5 2,700 $ $ 6 2,900 $ $ 7 3,150 $

$

Explanation / Answer

Purchase cost = 13055+270+145=13470

Per hour cost = (cost -salvage) /estimated life

                           = (13470- 570) /30000

                          = 12900 /30000

                         = $ .43 per hour

year Hours of operation (A) Depreciation (.43*Hours) Book value 1 2850 1225.5             [.43*2850] 13470-1225.5= 12244.5 2 3200 1376               [.43*3200] 12244.5-1376= 10868.5 3 3350 1440.5             [.43*3350] 10868.5-1440.5 = 9428 4 2350 1010.5           [.43*2350] 9428-1010.5 = 8417.5 5 2700 1161               [.43*2700] 8417.5-1161= 7256.5 6 2900 1247                [.43*2900] 7256.5-1247 = 6009.5 7 3150 1354.5            [.43*3150] 6009.5-1354.5= 4655

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