Answer:
a. $28,125
b. $60,000
c. $14,400
Explanation:
The computation of the depreciation expense for the last six months is shown below:
a) Straight-line method:
= (Purchase value of machinery - residual value) ÷ (useful life)
= ($240,000 - $15,000) ÷ (4 years)
= ($225,000) ÷ (4 years)
= $56,250
In this method, the depreciation is same for all the remaining useful life
So, for 6 months it would be
= $56,250 × 6 months ÷ 12 months
= $28,125
(b) Double-declining balance method:
First we have to find the depreciation rate which is shown below:
= One÷ useful life
= 1 ÷ 4
= 25%
Now the rate is double So, 50%
In year 1, the original cost is $240,000 so the depreciation is $60,000 after applying the 50% depreciation rate and 6 months
(c) Units-of-production method:
= (Purchase value of machinery - residual value) ÷ (estimated operating hours)
= ($240,000 - $15,000) ÷ (25,000 operating hours)
= ($225,000) ÷ (25,000 operating hours)
= $9 per hour
Now for the current year, it would be
= Estimated operating hours in the current year × depreciation per hour
= 1,600 hours × $9
= $14,400
