Exercise 9-6 Rottino Company purchased a new machine on October 1, 2017, at a co

Question

Exercise 9-6

Rottino Company purchased a new machine on October 1, 2017, at a cost of $137,000. The company estimated that the machine will have a salvage value of $21,500. The machine is expected to be used for 10,000 working hours during its 4-year life.

2017

2017

2017

2018

Exercise 9-6

Rottino Company purchased a new machine on October 1, 2017, at a cost of $137,000. The company estimated that the machine will have a salvage value of $21,500. The machine is expected to be used for 10,000 working hours during its 4-year life.

Explanation / Answer

1) Straight line dep = (137000-21500/4)*3/12 = 7219

2) Unit of production dep = (137000-21500/10000)*1780 = 20559

3) Straight line rate = 100/4=25%

Double decline rate = 25*2=50%

2017 Dep = 137000*50%*3/12 = 17125

2018 Dep = (137000*50%*9/12+137000*50%*50%*3/12) = 59938

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