Question

Question 6 --/1 View Policies Current Attempt in Progress Bonita Corp. purchased machinery for $330,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $16,500, production of 250,800 units, and working hours of 25,000. During 2021, Bonita Corp. uses the machinery for 2,650 hours, and the machinery produces 27,800 units. From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers to 0 decimal places, e.g. 45,892.) (a) Straight-line (b) Units-of-output (c) Working hours (d) Sum-of-the-years'-digits (e) Declining-balance (use 20% as the annual rate) $

Answer 1

Compute the depreciation under straight line method for 2021 as follows: Depreciation under straight-line method => Cost of machinery - Salvage value Useful life of machinery $330,000 - $16,500 10 = $31,350 Therefore, the depreciation for 2021 under straight-line method is $31,350. (6) Compute the depreciation for 2021 under units-of-output method as follows: Cost of machinery - Salvage value Depreciation per unit under units-of-output method = Total expected units $330,000 - $16,500 250.800 = $1.25 per unit Hence, the depreciation for 2021 under units-of-output method is, Depreciation = Depreciation per unit x Units produced =$1.25x 27,800 =$34.750 Therefore, the depreciation for 2021 under units-of-output method is $34,750.

Compute the depreciation for 2021 under based on working hours method as follows: Cost of machinery - Salvage value Depreciation per hour under working hours method = Total expected hours $330,000 - $16,500 25,000 = $12.54 per hour Hence, the depreciation for 2021 under working hours method is, Depreciation Depreciation per hour x Hours used =$12.54 x 2,650 =$33,231 Therefore, the depreciation under working hours method is $33,231 - (d) Compute the depreciation under sum-of-years-digits method as follows: Depreciation under sum-of-years-digits method =(Cost - Salvage value) Remaining useful life Sum of the years digits =($330,000 - $16,500) = $51,300 Therefore, the depreciation under sum-of-year digits method is $51,300.

(e) Compute the depreciation under declining balance method as follows: Depreciation under declining balance method = Net book value at the beginning * Depreciation rate = {s:30.00 [:-(100 * )]20 = $57,200 Therefore, the depreciation under declining balance method for 2021 is $57,200 -