Exercise 10-6 Rottino Company purchased a new machine on October 1, 2017, at a c

Question

Exercise 10-6 Rottino Company purchased a new machine on October 1, 2017, at a cost of $125,000. The company estimated that the machine will have a salvage value of $14,900. The machine is expected to be used for 11,400 working hours during its 5-year lde Compute the deprecaton expense under straight Ine method for 2017. (Round answer to 0 de inal places,?2,125) 2017 Depreciation expense Compute the depreciation expense under units-of-activity for 2017, assuming machine usage was 1,800 hours. (Round answer to O decimal places, eg. 2, 125.) 2017 Depreciation expense Compute the deprediation expense under dedining-balance using double the straight line rate for 2017 and 2018.(Round answers to O decimal places, e.g.2,125 2017 2018 Deprecation expense

Explanation / Answer

1) Depreciation under straight line = cost less salvage value / useful life in months * 3/12

(125000-14900)/60 * 3 = 5505

2) Depreciation under unit of activity method =

cost less salvage value / useful working hours * working hours used

(125000- 14900)/11400 * 1800 = 17384

3) Depreciation under declining balance using double the straight line is

Dep base 110100

Dep expense 110100/5 = 22020

Hence straight line depreciation is 20 and double is 40%

So depreciation for 2017 110100 * 40% * 3/12 = 110100

For depreciation for 2018 110100 * 40% = 440400

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