Sandhill Corp. purchased machinery for $393,750 on May 1, 2017. It is estimated

Question

Sandhill Corp. purchased machinery for $393,750 on May 1, 2017. It is estimated that it will have a useful life of 10 years, salvage value of $18,750, production of 300,000 units, and working hours of 25,000. During 2018, Sandhill Corp. uses the machinery for 2,650 hours, and the machinery produces 31,875 units.

From the information given, compute the depreciation charge for 2018 under each of the following methods. (Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers to 0 decimal places, e.g. 45,892.)

a.

b.

Sum-of-the-years'-digits

Explanation / Answer

b)

Year Cost of the assets Salvage value Depreciable value sum of the year 2017 Depreciation 2018 Depreciation 2017 $                 393,750 $           18,750 $                   375,000 1+2+3+4+5+6+7+8+9+10 = 55 $375,000 * (10/55)*8/12 = $45,454.55 $375,000 * (10/55)*4/12 = $$22,727.27 2018 $                 393,750 $           18,750 $                   375,000 1+2+3+4+5+6+7+8+9+10 = 55 $375,000 * (9/55)*8/12 = $40,909.09 Ful Depreciation $                                                          45,455 63636

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