Coronado Corporation purchased a new machine for its assembly process on August

Question

Coronado Corporation purchased a new machine for its assembly process on August 1, 2017. The cost of this machine was $162,702. The company estimated that the machine would have a salvage value of $17,802 at the end of its service life. Its life is estimated at 5 years, and its working hours are estimated at 21,000 hours. Year-end is December 31.

Compute the depreciation expense under the following methods. Each of the following should be considered unrelated

a. Straight Line Method for 2017

b. Sum-of-the-years'-digits for 2018

c. Double-declining-balance for 2018

Explanation / Answer

a)

b)

c)

Straight line Method Cost of Machine $ 162,702 Less: Salvage value $ (17,802) Depreciable value $ 144,900 Depreciation per year ($144,900 / 5) $    28,980 Depreciation for 2017 ($28,980/12 months * 5 months) $    12,075

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