determine the depriciation expense for this machine for 2007 and 2008 under each of the following

Accounting
Tutor: None Selected Time limit: 1 Day

Company purchased equipment in January 1,2007 at cost of 600,000. The equipment is expected to have a service life of 10 years or 50 000 hours and a residual value of 40 000. During 2007, the equipment was operated for 4000 hours and during 2008 it was operated for 7000 hours.

Straight line; hours run/activity method; double declining; sum of the year digits

Mar 25th, 2015

1. Straight line    =   56,000

2.  Hours run/activity method   =  i)  2007  =  44,800      ii)  2008    =  78,400

3. Double declining  =  112,000

4. Sum of the year digits  =  i)   2007  =  101,818.18      ii)  2008   =  91,636.36

Mar 25th, 2015

Is the straight line = 56,000 equal for both 2007 and 2008

Mar 25th, 2015

Yes exactly. Because under straight line method the depreciation is constant for all the years.

Mar 25th, 2015

May you please write formula how you got those results

Mar 25th, 2015

I) (Cost of the asset  - Residual value) / Life time of the Asset

2)  (Cost of the asset  - Residual value) / Working Hours time of the Asset

3) Depreciation under Straight line  X 2

4) SYD Depreciation =Depreciable Base √óRemaining Useful LifeSum of the Years' Digits

Mar 25th, 2015

one more question Double declining is the same for both 2007 and 2008 and why

Mar 25th, 2015

That will be based on the straight line method

Mar 25th, 2015

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Mar 25th, 2015
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