6. Snap Products purchased a machine for $640,000 on January 1, 2015. The compan

Question

6. Snap Products purchased a machine for $640,000 on January 1, 2015. The company intends to depreciate it over 5 years. Salvage value is $40,000.

a.     Calculate Depreciation for 2015 using the double-declining balance method.

b.     If the machine had a useful life of 30,000 hours, it was used for 4,000 hours in 2015 and 5,000 hours in 2016. What is the depreciation expense for 2016?

c.      If depreciation is computed on the sum-of-the-years digits the basis of the nearest full month, the depreciation expense for 2015 on this machinery would be:

d.     If depreciated on a straight line basis, what would depreciation expense for 2016

Explanation / Answer

6a) Double declining method rate =1/5*2 0.4 depreciation expense 640,000*40% 256000 answer b) rate = (640,000-40000)/30000 20 Depreciation expense =20*4000 80000 c) Sum of the years digit (5*6)/2 15 Depreciation expense =600,000*5/15 200000 d) deprecation under straight line method 600,000/5 120000

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