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FinnZ [79.3K]
3 years ago
8

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful oper

ating life of 13,350 copies. Assuming that it will have a residual value of $75, determine the depreciation for the first year by the three methods listed below. If required, round your answers to two decimal places. a. Straight-line method $ b. Double-declining-balance method $ c. Units-of-output method (4,500 copies were made the first year) $
Business
1 answer:
mafiozo [28]3 years ago
3 0

Answer:

a. Straight-line method

Depreciation Expense for the first year: $333.75

b. Double-declining-balance method

Depreciation Expense for the first year: $667.5

c. Units-of-output method

Depreciation Expense for the first year: $450

Explanation:

a. Straight-line method

Depreciation Expense each year is calculated by following formula

Annual Depreciation Expense = (Cost of machine − Residual Value)/Useful Life = ($1,410 - $75)/4 = $333.75

Depreciation Expense for the first year: $333.75

b. Double-declining-balance method

Under the straight-line method, useful life is 4 years, so the asset's annual depreciation will be 25% of the Depreciable cost.

Depreciable cost = Total cost of machine - Residual value =  $1,410-$75 = $1.335

Under the double-declining-balance method the 25% straight line rate is doubled to 50% - multiplied times

Depreciation Expense for the first year = $1.335 x 50% = $667.5

c. Units-of-output method

Depreciation Expense per copy = (Cost of machine − Residual Value)/Life in Number of Units  = ($1,410 - $75)/13,350 = $0.1

Depreciation Expense for the first year = Depreciation Expense per copy x number of copies were made the first year = $0.1 x 4,500 = $450

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