Jon Seceda Furnace Corp. purchased machinery for $321,300 on May 1, 2014. It is
ID: 2424507 • Letter: J
Question
Jon Seceda Furnace Corp. purchased machinery for $321,300 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $15,300, production of 244,800 units, and working hours of 25,000. During 2015, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 26,010 units.
From the information given, compute the depreciation charge for 2015 under each of the following methods
Working hours
Sum-of-the-years'-digits
Declining-balance (use 20% as the annual rate
Explanation / Answer
Working hours
Sum-of-the-years'-digits
10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55
or
=+(10*(10+1))/2 =55
(10/55) * 306,000 * 1/3 = $18,182
(9/55) * 306,000 * 2/3 = $32,727
Total =18545+33382 =51927
(e) Declining-balance (use 20% as the annual rate e 1/10 *2 =20%).
=321300*20%*1/3=21420
=+(321300-(321300*20%))*20%*2/3 =34272
2015 depreciation=21420+34272 =55692
machinery Cost 321300 salvage value 15,300 Depreciable Value 3,06,000 working hours 25000 Depreciation rate per hour 306000/25000 12.24 uses the machinery for 2,650 hours Depreciation =2650*12.24 32436Related Questions
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