We appreciate your visit to Hinshaw Company purchased a new machine on October 1 2014 at a cost of 85 480 The company estimated that the machine has a salvage. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Final answer:
Depreciation for Hinshaw Company's machine was calculated using the declining-balance method ($4,873 for 2014), determining the depreciation cost per hour ($1.20/hour), and the units-of-activity method ($4,728 for 3,940 hours in 2014).
Explanation:
The question involves computing depreciation for a machine using different methods, which is a common practice in the field of accounting and business finance. Here are the methods explained and calculated for Hinshaw Company's machine:
a. Declining-Balance Method
The double declining-balance method is an accelerated depreciation method. First, the straight-line depreciation rate is calculated by taking the reciprocal of the expected life of the asset. The double declining-balance rate is therefore 2/8, or 25%, as the asset has an 8-year life. For the years 2014 and 2015, since the asset was in service starting October 1, the depreciation will be pro-rated for three months of the year.
The calculation for 2014 is as follows:
(Cost of the machine - salvage value) × (25% × 3/12) = ($85,480 - $7,520) × 0.0625 = $77,960 × 0.0625 = $4,872.50 (rounded to 0 is $4,873)
b. Depreciation Cost per Hour
The depreciation cost per hour is calculated by subtracting the salvage value from the cost and then dividing by total expected working hours.
(Cost of the machine - salvage value) / total working hours = ($85,480 - $7,520) / 64,910 = $1.20 per hour (rounded to 2 decimal places)
c. Units-of-Activity Method for 2014
Using the units-of-activity method, the depreciation expense is based on hours of machine use.
((Cost of the machine - salvage value) / total working hours) × hours used in 2014 = $1.20 × 3,940 hours = $4,728 (rounded to 0 is $4,728)
Thanks for taking the time to read Hinshaw Company purchased a new machine on October 1 2014 at a cost of 85 480 The company estimated that the machine has a salvage. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
