Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $90,720

Question

Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $90,720. The company estimated that the machine has a salvage value of $8,150. The machine is expected to be used for 64,270 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Declining-balance using double the straight-line rate for 2014 and 2015. (Round answers to 0 decimal places, e.g. 125) Calculate the depreciation cost per hour. (Round answer to 2 decimal places, e.g. $6.25) Units-of-activity for 2014, assuming machine usage was 3,210 hours. (Round answer to 0 decimal places, e.g. 125)

Explanation / Answer

1) Depreciation Using the declining balance Method

2014 = $5670

2015 = $21263

2) Depreciation Cost Per hour = $ 1.28 per hour

3) Depreciation using the unit of activity method for 2014 = $4124

Depreciation Schedule Year
Book Value
Year Start Depreciation
Percent Depreciation
Expense Accumulated
Depreciation Book Value
Year End 2014 $90,720 6.25% $5,670 $5,670 $85,050 2015 $85,050 25.00% $21,263 $26,933 $63,788

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