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Pavlova-9 [17]
3 years ago
14

Ivanhoe Company purchased a new machine on October 1, 2017, at a cost of $77,980. The company estimated that the machine has a s

alvage value of $6,860. The machine is expected to be used for 72,900 working hours during its 7-year life. Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end.
Business
1 answer:
Marysya12 [62]3 years ago
7 0

Answer:

Depreciation for

2017 = $2,540

2018 = $10,160

Explanation:

Provided, Total cost of the machine = $77,980

Estimated salvage value = $6,860

Therefore, value to be depreciated = $77,980 - $6,860 = $71,120

Total life of asset = 7 years

Depreciation for the year 2017 = October to December = 3 months

\frac{71,120}{7} \times \frac{3}{12} = $2,540

Depreciation for the year 2018 = \frac{71,120}{7} = $10,160

Under straight line method depreciation is fixed for each year, but in the given case in 2017 the asset is used only for 3 months, thus depreciation will be charged for 3 months only.

Final Answer

Depreciation for

2017 = $2,540

2018 = $10,160

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