ACCOUNTING Chapter 11 Homework value 5.00 points On October 1, 2016, the Alleghe

Question

ACCOUNTING Chapter 11 Homework value 5.00 points On October 1, 2016, the Allegheny Corporation purchased machinery for $257,000. The estimated service life of the machinery is 10 years and the estimated residual value is $4,000. The machine is expected to produce 460,000 units during its life. Required: Calculate depreciation for 2016 and 2017 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. (Do not round intermediate calculations.)

Explanation / Answer

under straight line method:

2016

annual depreciation= cost- scraop value/useful life of asset

=(257000-4000)/10= $25300

similarly for 2017, depreciation amount will be 25300

( since under slm, depreciation is spreaded in equal amoun

its over the useful life of asset)

sum of the years digit method:

here more depreciation is charged in initial years with decline in the coming later years:

thu for 2016 depreciation=(257000-4000)*10/(1+2+3+4+5+6+7+8+9+10)=$46000

then for 2017 it will be 253000*9/55=$41400

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