Question

Exercise 9-6

Rottino Company purchased a new machine on October 1, 2017, at a cost of $110,000. The company estimated that the machine will have a salvage value of $10,000. The machine is expected to be used for 10,000 working hours during its 4-year life.

[Incorrect answer.] Your answer is incorrect. Try again.

Compute the depreciation expense under straight-line method for 2017. (Round answer to 0 decimal places, e.g. 2,125.)

2017
Depreciation expense
$
[Entry field with incorrect answer]

LINK TO TEXT

[Incorrect answer.] Your answer is incorrect. Try again.

Compute the depreciation expense under units-of-activity for 2017, assuming machine usage was 1,500 hours. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answer to 2 decimal places, e.g. 2,125.25.)

2017
Depreciation expense
$
[Entry field with incorrect answer]

LINK TO TEXT

[Incorrect answer.] Your answer is incorrect. Try again.

Compute the depreciation expense under declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 2,125.)

2017
2018
Depreciation expense
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]

LINK TO TEXT

Question Attempts: Unlimited
SAVE FOR LATER
SUBMIT ANSWER

Answer 1

A. Straight Line for 2017

Straight Line Depreciation

=Cost -salvage value / Life if assets

=110,000-10,000 /4

=100,000/4

=25,000

For Oct to December 2017 deprecation

=25,000*3/12

=$6250

2017 Depreciation expense =$6250

__________________________________________

B. Units of Activity for 2017, assuming machine usage was 1,500 hours

Units of Activity Depreciation

=Cost -salvage value / units produced Life if assets

=110,000-10,000 /10,000

=100,000/10,000

=$10 depreciation per unit

For Oct to December 2017 deprecation

=1500 units x $_10

=1500*10

=15000

Depreciation as per Units of Activity for 2017= $15,000

________________________________________

C. Declining-balance using the double straight line rate for 2017 and 2018

DDB rate

=2 x Straight Line rate

=2 x (100/4)

=2x 25%

=50%

Year	Beginning Balance	DDB rate	Depreciation calculation	Depreciation expanses	Ending Book value
2017	110,000	50%	110,000*50%*3/12	13750	96,250
2018	96,250	50%	96,250*50%	48125	48,125

Year	Depreciation expanses
2017	13750
2018	48125