Stellar Corporation purchased a new machine for its assembly process on August 1

Question

Stellar Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $153,270. The company estimated that the machine would have a salvage value of $16,770 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,400 hours. Year-end is December 31.

Compute the depreciation expense under the following methods. Each of the following should be considered unrelated. (Round depreciation rate per hour to 2 decimal places, e.g. 5.35 for computational purposes. Round your answers to 0 decimal places, e.g. 45,892.)
(a) Straight-line depreciation for 2017 $

(b) Activity method for 2017, assuming that machine usage was 800 hours $

(c) Sum-of-the-years'-digits for 2018 $

(d) Double-declining-balance for 2018 $

Explanation / Answer

(a)

(b)Activity method

(c)

(d)

Straight line Method Cost of Equipment $ 153,270 Less: Salvage value $    16,770 Depreciable value $ 136,500 Depreciation per year ($136,500 / 5) $    27,300 Depreciation for 2017 ($27,300 / 12 * 5 months) $    11,375

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