Whispering Corporation purchased a new machine for its assembly process on Augus

Question

Whispering Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $122,616. The company estimated that the machine would have a salvage value of $13,416 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 19,500 hours. Year-end is December 31.

Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to 0 decimal places, e.g. 45,892.)

Explanation / Answer

Compute the depreciation expense under the following methods. Each of the following should be considered unrelated.

SUm of year digit = (5+4+3+2+1) = 15

depreciable base = (122616-13416) = 109200

Sum of year digit dep for 2018 = (109200*5/15*7/12+109200*4/15*5/12) = 33366

Double decline balance :

Double declining balance for 2018 = (122616*40%*7/12+122616*60%*40%*5/12) = 40872

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