Question

On October 1, 2018, the Allegheny Corporation purchased machinery for $314,000. The estimated service life of the machinery is 10 years and the estimated residual value is $6,000. The machine is expected to produce 550,000 units during its life.

Required:
Calculate depreciation for 2018 and 2019 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service.

1. Straight line.
2. Sum-of-the-years’-digits.
3. Double-declining balance.
4. One hundred fifty percent declining balance.
5. Units of production (units produced in 2018, 28,000; units produced in 2019, 43,000).

Sum-of-the-years' digits depreciation Depreciable Base x Rate per Year x Fraction of Year = Depreciation Expense 10/1/2018 through 12/31/2018 x x = Total depreciation expense - 2018 1/1/2019 through 9/30/2019 x x = 10/1/2019 through 12/31/2019 x x = Total depreciation expense - 2019 Calculate depreciation for 2018 and 2019 using double-declining balance. Partial-year depreciation is calculated based on the number of months the asset is in service. Depreciation for the Period End of Period Annual Period Beginning of Period Book Value Depreciation Rate Fraction of Year Depreciation Expense Accumulated Depreciation Book Value 2018 $0 2019 $0 $0

Straight-Line Depreciation Choose Numerator: / Choose Denominator: = Annual Depreciation / = Annual Depreciation / = Year Annual Depreciation x Fraction of Year = Depreciation Expense 2018 x = 2019 x =

Calculate depreciation for 2018 and 2019 using one hundred fifty percent declining balance. Partial-year depreciation is calculated based on the number of months the asset is in service. (Do not round your intermediate calculations and round your final answers to nearest whole number.)

	Depreciation for the Period End of Period Annual Period Beginning of Period Book Value Depreciation Rate Fraction of Year Depreciation Expense Accumulated Depreciation Book Value 2018 $0 2019 $0 $0

Calculate depreciation for 2018 and 2019 using Units of production (units produced in 2018, 28,000; units produced in 2019, 43,000). Partial-year depreciation is calculated based on the number of months the asset is in service. (Round "Depreciation per unit rate" answers to 2 decimal places.)

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	Select formula for Units of Production Depreciation: Calculate 2018 depreciation expense: Depreciation per unit rate Units produced in 2018 Depreciation in 2018 Calculate 2019 depreciation expense: Depreciation per unit rate Units produced in 2019 Depreciation in 2019

Answer 1

Solution 1:

Straight-Line Depreciation
	Choose Numerator:	/	Choose Denominator:	=	Annual Depreciation
	Depreciable cost	/	Life of asset	=	Annual Depreciation
	$308,000.00	/	10	=	$30,800.00
Year	Annual Depreciation	x	Fraction of Year	=	Depreciation Expense
2018	$30,800.00	x	3/12	=	$7,700.00
2019	$30,800.00	x	1	=	$30,800.00

Solution 2:

Sum-of-the-years' digits depreciation
	Depreciable Base	x	Rate per Year	x	Fraction of Year	=	Depreciation Expense
10/1/2018 through 12/31/2018	$308,000.00	x	10/55	x	3/12	=	$14,000.00
Total depreciation expense - 2018							$14,000.00
1/1/2019 through 9/30/2019	$308,000.00	x	10/55	x	9/12	=	$42,000.00
10/1/2019 through 12/31/2019	$308,000.00	x	9/55	x	3/12	=	$12,600.00
Total depreciation expense - 2019							$54,600.00

Solution 3:

	Depreciation for the Period				End of Period
Annual Period	Beginning of Period Book Value	Depreciation Rate	Fraction of Year	Depreciation Expense	Accumulated Depreciation	Book Value
2018	$314,000.00	20%	3/12	$15,700.00	$15,700.00	$298,300
2019	$298,300.00	20%	1	$59,660.00	$75,360.00	$238,640

Solution 4:

	Depreciation for the Period				End of Period
Annual Period	Beginning of Period Book Value	Depreciation Rate	Fraction of Year	Depreciation Expense	Accumulated Depreciation	Book Value
2018	$314,000	15%	3/12	$11,775	$11,775	$302,225
2019	$302,225	15%	1	$45,334	$57,109	$256,891

Solution 5:

Units of production method
Calculate 2018 depreciation expense:
Depreciation per unit rate	$0.56
Units produced in 2018	28000
Depreciation in 2018	$15,680.00
Calculate 2019 depreciation expense:
Depreciation per unit rate	$0.56
Units produced in 2019	43000
Depreciation in 2019	$24,080.00