Compute the annual depreciation charges over the machine

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Question: On January 1, 2017, a machine was purchased for $120,000. The machine has an estimated salvage value of $6,000 and an estimated useful life of 6 years. The machine can operate for 200,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2017, 35,000 hrs; 2018, 45,000 hrs; 2019, 55,000 hrs; 2020, 30,000 hrs; 2021, 20,000 hrs; 2022, 15,000 hrs.

(a) Compute the annual depreciation charges over the machine's life assuming a December 31 year-end for each of the following depreciation methods: (1) Straight-line method. (2) Activity method. (3) Sum- of-the-years'-digits method. (4) Double-declining-balance method.

(b) Assume a fiscal year-end of March 31. Compute the annual depreciation charges over the asset's life applying each of the following methods: (1) Straight-line method. (2) Sum-of-the-years'-digits method. (3) Double-declining-balance method.

Reference no: EM133371214

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