Question 9 Nash Company purchased machinery for $147,000 on January 1, 2017. It

Question

Question 9 Nash Company purchased machinery for $147,000 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14,700, production of 81,000 units, and working hours of 38,200. During 2017, the company uses the machinery for 14,134 hours, and the machinery produces 17,820 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years'-digits, and double-declining-balance methods. (Round intermediate calculations to 5 decimal places, e.g. 1.56487 and final answers to 0 decimal places, e.g. 5,125) Depreciation Straight-line Units-of-output Working hours Sum-of-the-years'-digits Double-declining-balance

Explanation / Answer

Depreciation under straight lien method

= (Purchase price – Salvage value) / Useful life

= ($147,000 - $14,700) / 20

= $ 6,615

Depreciation under units of output method

= [ (Purchase price – Salvage value) / Useful life in units ] x Units produced in year of depreciation

= [($147,000 - $14,700) / 81,000 ] x 17,820

= $29,106

Depreciation under working hours method

= [ (Purchase price – Salvage value) / Useful life in hours ] x Hours in year of depreciation

= [($147,000 - $14,700) / 38,200 ] x 14,134

= $48,951

Depreciation under sum of years digits method

Sum of years of useful life

= n x (n + 1) / 2

Where,

n = Useful life = 20 years

So, Sum of years

= 20 x 21 / 2

= 210

Depreciation under sum of years digit method

= [ (Purchase price – Salvage value) ] x Remaining life for first year / Sum of years

= [($147,000 - $14,700) ] x 20 / 210

= $12,600

Depreciation under double declining balance method

Double declining rate

= [ 1 / Useful life under straight line method ] x 2

= [ 1 / 20 ] x 2

= 0.10 or 10%

So, Depreciation under double declining balance method

= Book value at the beginning of the year x Double declining rate

= $147,000 x 10%

= $14,700

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.