Question

In: Accounting

Sandhill Co. purchased a new machine on October 1, 2022, at a cost of $88,100. The company estimated that the machine h...

Sandhill Co. purchased a new machine on October 1, 2022, at a cost of $88,100. The company estimated that the machine has a s

Sandhill Co. purchased a new machine on October 1, 2022, at a cost of $88,100. The company estimated that the machine has a salvage value of $5,700. The machine is expected to be used for 80,000 working hours during its 10-year life. 


Compute depreciation using the following methods in the year indicated. 


Declining-balance using double the straight-line rate for 2022 and 2023. 2022 2023 Depreciation using the Declining-balance method $ 

Calculate the depreciation cost per hour. (Round answer to 2 decimal places, e.g. $1.25) 

Depreciation cost per hour $ Units-of-activity for 2022, assuming machine usage was 460 hours. (Round answer to O decimal places, e.g. 5,275.) 

Depreciation using the Units-of-activity method for 2022 $

Solutions

Expert Solution

Double declining depreciation rate = 2 x 1/useful life

= 2 x 1/10

= 20%

Depreciation expense for year 2022 = Cost of machine x Double declining depreciation rate

= 88,100 x 20% x 3/12

= $4,405

Book value of machine at the beginning of year 2023 = Cost of machine - Depreciation expense for year 2022

= 88,100-4,405

= $83,695

Depreciation expense for year 2023 = Book value of machine at the beginning of year 2023 x Double declining depreciation rate

= 83,695 x 20%

= $16,739

2022 2023
Depreciation using the Declining balance method $4,405 $16,739

Depreciation cost per hour = ( cost of machine - Salvage value )/ Useful life

= ( 88,100-5,700)/80,000

= $1.03 per hour

Depreciation using units of activity method for 2022 = Depreciation cost per hour x Number of hours used

= 1.03 x 460

= $474

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks


Related Solutions

Cullumber Company purchased a new machine on October 1, 2022, at a cost of $66,000. The...
Cullumber Company purchased a new machine on October 1, 2022, at a cost of $66,000. The company estimated that the machine has a salvage value of $7,140. The machine is expected to be used for 72,000 working hours during its 6-year life. Compute the depreciation expense under the straight-line method for 2022 and 2023, assuming a December 31 year-end. (Round answers to 2 decimal places, e.g. 5,275.25.) 2022 2023 The depreciation expense under the straight-line method $Enter a dollar amount...
Sandhill Company purchased equipment for $235,200 on October 1, 2017. It is estimated that the equipment...
Sandhill Company purchased equipment for $235,200 on October 1, 2017. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $13,440. Estimated production is 39,600 units and estimated working hours are 20,000. During 2017, Sandhill uses the equipment for 530 hours and the equipment produces 1,100 units. Compute depreciation expense under each of the following methods. Sandhill is on a calendar-year basis ending December 31. (Round rate per hour and rate...
Ivanhoe Company purchased a new machine on October 1, 2017, at a cost of $ 87,800....
Ivanhoe Company purchased a new machine on October 1, 2017, at a cost of $ 87,800. The company estimated that the machine has a salvage value of $ 8,800. The machine is expected to be used for  64,200 working hours during its  8-year life. Compute depreciation using the following methods in the year indicated. Declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125) 2017 2018 Depreciation using the Declining-balance method $ enter a...
Jensen Company purchased a new machine on October 1, 2017, at a cost of $104,000. The...
Jensen Company purchased a new machine on October 1, 2017, at a cost of $104,000. The company estimated that the machine has a salvage value of $8,000. The machine is expected to be used for 80,000 working hours during its 8-year life. Instructions Compute depreciation using the following methods in the year indicated. (a)     Straight-line for 2017 and 2018, assuming a December 31 year-end. (b)     Declining-balance using double the straight-line rate for 2017 and 2018. (c)     Units-of-activity for 2017, assuming...
Exercise 9-20 Oriole Company purchased a new machine on October 1, 2017, at a cost of...
Exercise 9-20 Oriole Company purchased a new machine on October 1, 2017, at a cost of $86,400. The company estimated that the machine has a salvage value of $7,100. The machine is expected to be used for 64,300 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125) 2017 2018 Depreciation using the Declining-balance method $enter...
Exercise 9-20 Oriole Company purchased a new machine on October 1, 2017, at a cost of...
Exercise 9-20 Oriole Company purchased a new machine on October 1, 2017, at a cost of $86,400. The company estimated that the machine has a salvage value of $7,100. The machine is expected to be used for 64,300 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Declining-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125) 2017 2018 Depreciation using the Declining-balance method $enter...
Exercise 9-6 Rottino Company purchased a new machine on October 1, 2017, at a cost of...
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...
On October 1, 2022, Pharoah Company places a new asset into service. The cost of the...
On October 1, 2022, Pharoah Company places a new asset into service. The cost of the asset is $96500 with an estimated 5-year life and $21500 salvage value at the end of its useful life. What is the depreciation expense for 2022 if Pharoah Company uses the straight-line method of depreciation? $4825. $3750. $19300. $9650.
A plant asset acquired on October 1, 2022 at a cost of $800,000 has an estimated...
A plant asset acquired on October 1, 2022 at a cost of $800,000 has an estimated useful life of 10 years. The salvage value is estimated to be $50,000 at the end of the asset's useful life. Instructions Determine the depreciation expense for the first two years using the: (a)     straight-line method. (b)     double-declining-balance method.
Monty Corp. purchased a new machine on October 1, 2019, at a cost of $124,000. The...
Monty Corp. purchased a new machine on October 1, 2019, at a cost of $124,000. The company estimated that the machine will have a salvage value of $15,000. The machine is expected to be used for 10,000 working hours during its 4-year life. Compute the depreciation expense under straight-line method for 2019. (Round answer to 0 decimal places, e.g. 2,125.) 2019 Depreciation expense $    Compute the depreciation expense under units-of-activity for 2019, assuming machine usage was 1,860 hours. (Round...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT