Kimmel, Financial Accounting, Be Helo I System Annosun CALCULATOn Exercise 9-20

Question

Kimmel, Financial Accounting, Be Helo I System Annosun CALCULATOn Exercise 9-20 Wildhorse Co. purchased a new machine on October 1, 2017, at a cost of $86,300. The company estimated that the machine has a salvage value of $8,600. The machine is expected to be used for 67,200 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to O decimal places, o.g. 125) 20172018 Depreciation using the Declining-balance method Calculate the depreciation cost per hour. (Round answer to 2 decimal places, e.g.$1.25) Depreciation cost per hours Units-of-activity for 2017, assuming machine usage was 490 hours. (Round answer to O declmal places, e.g. 125) Depreciation using the Units-of-activity method for 2017s s 116 Question Attempts: 0 of 12 used SAVE FOR LATER BUBKET ANSW

Explanation / Answer

On basis of double declining method: depreciation calculation by straight line method is 86300-8600= 77700/8= 9712.50 so depreciation rate will be 9712.50/77700 * 100= 12.5% which comes to 12.5%*2= 25% for year 2017 to year 2018 so machiberm purchased in october 2017 so depreciation rate will be 6.25% dep. For 2017 will be $ 5394 and that of 2018 by 25% will be$ 20227. On basis of unit activity as dep cost per hour is $1.16 so if in 2017 490 hours machine worked dep will be $1.16*490hrs = $568

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