Question

On January 2, 2015, Roth, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life was four years or 1,150,000 cuttings, after which it could be sold for $5,000.
Required
a. Calculate each year’s depreciation expense for the machine's useful life under each of the following depreciation methods (round all answers to the nearest dollar):
1. Straight-line.
2. Double-declining balance.
3. Units-of-production. (Assume annual production in cuttings of 280,000; 430,000; 360,000; and 80,000.)
1. Straight-Line
Year Depreciation
Expense
2015 $Answer
2016 Answer
2017 Answer
2018 Answer
2. Double-declining balance
Year Depreciation
Expense
2015 $Answer
2016 Answer
2017 Answer
2018 Answer
2019 Answer
3. Units of Production
Year Depreciation
Expense
2015 $Answer
2016 Answer
2017 Answer
2018 Answer
b. Assume that the machine was purchased on July 1, 2015. Calculate each year’s depreciation expense for the machine's useful life under each of the following depreciation methods:
1. Straight-line.
2. Double-declining balance.
1. Straight-Line
Year Depreciation
Expense
2015 $Answer
2016 Answer
2017 Answer
2018 Answer
2019 Answer
2. Double-declining balance (Round answers to the nearest whole number, when appropriate.)
Year Depreciation
Expense
2015 $Answer
2016 Answer
2017 Answer
2018 Answer
2019 Answer

Answer 1

Answer:

Explanation:

Depreciation is the systematic allocation of the cost of a machine over its useful lifetime.

There are different types of depreciation like the straight line , double declining  and the units of production method.

Workings

Depreciable amount = 120,000-5000 = 115,000

Useful life = 4 years

Depreciation rate = 115000/4 = 25% = 28,750

                                              2015      2016       2017         2018

Straight line depreciation    28,750  28,750   28,750    28,750

Double declining

Double declining rate = 25%*2 = 50%

2015 = 50% * 115,000= 57,500

2016

Opening book value = 115,000-57,500 = 57500

Depreciation = 57,500*50% = 28,750

2017

Opening book value = 57500-28,750 =28750

Depreciation = 50%*28,750 =14,375

2018

Opening book value   28750-14375 = 14375

Depreciation = 14375*50% = 7188

Units of production

2015 = 280000/1150,000*115,000 = 28,000

2016 =430,000/1150000*115000 = 43,000

2017= 360000/1150000*115000 = 36,000

2018 = 80,000/1150000*115000 = 8000

B

IF the machine was bought on July 1, 2015

Straight line depreciation

2015 = (25%*115000 ) /2 = 14,375

2016 =25%* 115,000 = 28,750

2017 = 25%*115000 = 28750

2018 = 25%*115,000 =28750

2019 =(25%*115000)/2 = 14,375

Double declining method

2015

(115,000*50,000)/2 =28750

2016

Opening book value =115,000-28750 =86250

Depreciation = 50%*86250 = 43,125

2017

Opening book value =86250-43125 =43125

Depreciation = 43,125*50% = 21,563

2018

Opening book value

43125-21563 =21562

Depreciation = 21562*50% =10,781

2019

Opening book value = 21562-10781 =10781

Depreciation = 50%*10781 = 5391