Question

Whispering Company purchased machinery for $165,900 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $14,700, production of 91,100 units, and working hours of 46,100. During 2017, the company uses the machinery for 13,369 hours, and the machinery produces 12,754 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years’-digits, and double-declining-balance methods. (Round intermediate calculations to 5 decimal places, e.g. 1.56487 and final answers to 0 decimal places, e.g. 5,125.)

for year 2017

		Depreciation
Straight-line		$
Units-of-output		$
Working hours		$
Sum-of-the-years’-digits		$
Double-declining-balance		$

Answer 1

Methods	Depreciation
	Straight-line	7,560
	Units-of-output	20,658
	Working hours	43,848
	Sum-of-the-year's-digits	14,400
	Double-declining-balance	16,590
Working Notes:
	Straight-line method
	Depreciation for 2017 = (cost -salvage value)/life of machine
		=($165,900 - $14,700)/20 years
		=$7,560
	Units-of-output method
	Depreciation for 2017 =( (cost -salvage value)/production units in whole life) x units produces in 2017
		=(($165,900 - $14,700)/91,100) x 12,754
		=1.61971 x 12,754
		=20,657.78134
		=$20,658
	Working hours method
	Depreciation for 2017 =( (cost -salvage value)/working hours in whole life) x machine working in 2017
		=(($165,900 - $14,700)/46,100) x 13,369
		=3.27983 x 13,369
		=43,848.04727
		=$43,848
	Sum-of-the-year's-digits
	Depreciation for 2017 =( (cost -salvage value) x (useful life /sum of the years of useful life)
		=(($165,900 - $14,700) x (20/210)
		=$151,200 x 20/210
		=$14,400
	Depreciable amount = (cost -salvage value)
		=$165,900 -$14,700
		=$151,200
	sum of the years of useful life = n(n+1)/2
	n = useful life =20	=20(20+1)/2
		=210
	Double-declining-balance method
	Double declining depreciation = 2(Straight-line depreciation rate)
		= 2 x (100%/life)
		= 2x 100%/20
		=10%
	Depreciation for 2017 = cost x 10%
		=$165,900 x 10%
		=$16,590