Wenner Furnace Corp. purchased machinery for $421,290 on May 1, 2012. It is esti

Question

Wenner Furnace Corp. purchased machinery for $421,290 on May 1, 2012. It is estimated that it will have a useful life of 10 years, salvage value of $22,650, production of 362,400 units, and working hours of 25,000. During 2013, Wenner Corp. uses the machinery for 2,650 hours, and the machinery produces 38,505 units.

From the information given, compute the depreciation charge for 2013 under each of the following methods.

(d) Sum-of-the-years Werner Furnace Corp. purchased machinery for $421,290 on May 1, 2012. It is estimated that it will have a useful life of 10 years, salvage value of $22,650, production of 362,400 units, and working hours of 25,000. During 2013, Werner Corp. uses the machinery for 2,650 hours, and the machinery produces 38,505 units. From the information given, compute the depreciation charge for 2013 under each of the following methods.

Explanation / Answer

DEPRECIATION RATE UNDER DOUBLE - DECLINING - BALANCE METHOD

(421290-22650)/10 = 39864

39864/(421290-22650) = 0.1

0.1 * 2 = 0.2

=20%

THEREFORE DEPRECIATION RATE PER YEAR UNDER DOUBLE - DECLINING - BALANCE METHOD IS 20%

THEREFORE DEPRECIATION CHARGE FOR THE YEAR 2013 UNDER DOUBLE - DECLINING - BALANCE METHOD

= 398640(0.8) * 20%

=63782

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