Machine Acquired Cost Salvage Value Useful Life (in years) Depreciation Method 1

Question

Machine Acquired Cost Salvage Value Useful Life (in years) Depreciation Method 1 Jan. 1, 2012 $124,000 $40,000 8 Straight-line 2 July 1, 2013 75,000 11,900 5 Declining-balance 3 Nov. 1, 2013 91,390 6,390 7 Units-of-activity For the declining-balance method, Farr Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 34,000. Actual hours of use in the first 3 years were: 2013, 710; 2014, 5,760; and 2015, 7,330. Collapse question part (a) Compute the amount of accumulated depreciation on each machine at December 31, 2015. B. If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this machine in 2013? In 2014?

Explanation / Answer

ans 1 Straight liane depreciation Dep=(124000-40000)/8 10500 Beg value Dep Acc dep end Value 2012 124000 10500 10500 113500 2013 113500 10500 21000 103000 2014 103000 10500 31500 92500 2015 92500 10500 42000 82000 Acc dep December 31 2015 42000 Double declining DDB rate=1/5*200% 40 Beg value Dep rate Dep Acc dep end Value 2012 75000 40% 15000 15000 60000 2013 60000 40% 24000 39000 36000 2014 36000 40% 14400 53400 21600 2015 21600 40% 8640 62040 12960 Acc dep December 31 2015 62040 Unit of activity (91390-6390)/34000 2.50 Beg value Dep rate hours Dep Acc dep end Value 2013 75000 2.5 710 1775 1775 73225 2014 73225 2.5 5760 14400 16175 58825 2015 58825 2.5 7330 18325 34500 40500 Acc dep December 31 2015 34500 ans b Double declining DDB rate=1/5*200% 40 Beg value Dep rate Dep Acc dep end Value 2012 75000 40% 22500 22500 52500 2013 52500 40% 21000 43500 31500 2014 31500 40% 12600 56100 18900 2015 18900 40% 7560 63660 11340 For 2012 dep is 75000*40%*9/12=22500 2013 21000 2014 12600

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