Hillary Company purchased a new machine on September 1, 2007, ata cost of $96,00

Question

Hillary Company purchased a new machine on September 1, 2007, ata cost of $96,000. The company estimated that the machine has asalvage value of $6,000. The machine is expected to be used for70,000 working hours during its 8-year life.

Compute depreciation using the following methods in the yearindicated. (Round all answers to 0 decimalplaces.)

Declining-balance using double the straight-line rate for 2007and 2008.

2007 $

2008 $

Units-of-activity for 2007, assuming machine usage was 2,900hours. (Round per unit to 2 decimal places tocalculate depreciation.)

2007 $

Explanation / Answer

Declining balance using double the straight-line rate. 100 = 12.5 8 Double the rate = 12.5 * 2 = 25% 1. 2007 96,000 * 25% * 4                       12 = $ 8,000 2. 2008 88,000 * 25% = $ 22,000 3.Units of activity for 2007 2,900 hrs 96,000 -6,000        70,000 = $ 1.29 Depreciation 2,900 * 1.29 = $ 3,741

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