Question

Wildhorse Ltd. purchased a new machine on April 4, 2014, at a cost of $152,000. The company estimated that the machine would have a residual value of $14,000. The machine is expected to be used for 9,200working hours during its four-year life. Actual machine usage was 1,300 hours in 2014; 2,000 hours in 2015; 2,500 hours in 2016; 1,800 hours in 2017; and 1,600hours in 2018. Wildhorse has a December 31 year end.

(a)

Calculate depreciation for the machine under each of the following methods: (Round expense per unit to 2 decimal places, e.g. 2.75 and final answers to 0 decimal places, e.g. 5,275.)

(1) Straight-line for 2014 through to 2018.

2014 expense		$enter a dollar amount
2015 expense		$enter a dollar amount
2016 expense		$enter a dollar amount
2017 expense		$enter a dollar amount
2018 expense		$enter a dollar amount

(2) Diminishing-balance using double the straight-line rate for 2014 through to 2018.

2014 expense		$enter a dollar amount
2015 expense		$enter a dollar amount
2016 expense		$enter a dollar amount
2017 expense		$enter a dollar amount
2018 expense		$enter a dollar amount

(3) Units-of-production for 2014 through to 2018.

2014 expense		$enter a dollar amount
2015 expense		$enter a dollar amount
2016 expense		$enter a dollar amount
2017 expense		$enter a dollar amount
2018 expense		$enter a dollar amount

Answer 1

1)
Straight-line Method
Depreciation Expense per year = Cost (-) Residual Value / useful Life )    = ( $ 152,000 (-) $ 14,000 ) / 4 Years    =    $ 34,500
For 2014 it is only Used for 9 months
2014 expense ( $ 34,500 x 9 / 12)	$ 25,875
2015 expense	$ 34,500
2016 expense	$ 34,500
2017 expense	$ 34,500
2018 expense ( $ 152,000 (-) $ 25,875 (-) ($ 34,500 x 3) (-) $ 14,000)	$ 8,625
2)
Diminishing-balance Method
Double declining rate    = 2 x 1/ Useful life x 100    = 2 x 1/ 4 x 100	50%
2014 expense ( $ 152,000 x 50% x 9 /12)	$ 57,000
2015 expense ( $ 152,000 (-) $ 57,000 ) x 50%	$ 47,500
2016 expense ( $ 152,000 (-) $ 57,000 (-) $ 47,500) x 50%	$ 23,750
2017 expense ( $ 152,000 (-) $ 57,000 (-) $ 47,500 (-) $ 23,750) x 50%	$ 11,875
2018 expense	$ 0
3)
Units-of-production method
Depreciation rate per hour = (Cost (-) Residual Value / Used Life    = ( $ 152,000 (-) $ 14,000 ) /9,200 hours    =    $ 15 per hour
2014 expense ( 1,300 x $ 15)	$ 19,500
2015 expense ( 2,000 x $ 15)	$ 30,000
2016 expense ( 2,500 x $ 15)	$ 37,500
2017 expense ( 1,800 x $ 15)	$ 27,000
2018 expense ( 1,600 x $ 15)	$ 24,000