98. Crane Company purchased a new machine on October 1, 2017, at a cost of $80,5

Question

98. Crane Company purchased a new machine on October 1, 2017, at a cost of $80,500. The company estimated that the machine has a salvage value of $6,720. The machine is expected to be used for 72,400 working hours during its 7-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.)

The depreciation expense under the straight-line method                            

2017                     2018

$                            $

Explanation / Answer

Compute depreciation expenses under straight line method :

Straight line method = (original cost-salvage value)/useful life

                              = (80500-6720)/7

Straight line Depreciation = 10540 per annum

2017 depreciation expenses = 10540*3/12 = 2635

2018 depreciation expenses = 10540

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