Exercise 9-5 Blossom Company purchased a new machine on October 1, 2017, at a co

Question

Exercise 9-5 Blossom Company purchased a new machine on October 1, 2017, at a cost of $90,640. The company estimated that the machine has a salvage value of $9,360. The machine is expected to be used for 70,500 working hours during its 8-year life. Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end. (Round answers to 0 decimal places, e.g. 5,275.) 2017 2018 The depreciation expense under the straight-line method Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Depreciation per year using the straight line method = (Cost - Salvage ) / Useful Life

= ( $ 90,640 - $ 9,360) / 8

= $ 10,160

Depreciation for the year 2017 = Depreciation Per Year * Number of Months Used / Total Number of Months

= $ 10,160 * 3 /12

= $ 2,540

Depreciation for the year 2018 = Depreciation Per Year * Number of Months Used / Total Number of Months

= $ 10,160 * 12 /12

= $ 10,160

Hence the correct answer is :

Note :

Number of Months Used in 2017 = October 1,2017 to December 31,2017

= 3 Months

2017 2018 Depreciation Expense $ 2,540 $ 10,160

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