# e11-4 - Jon Seceda Furnace Corp purchased machinery for...

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Jon Seceda Furnace Corp. purchased machinery for \$315,000 on May 1, 2007. It is estimated that it will have a useful life of 10 years, salvage value of \$15,000, production of 250,000 units, and working hours of 25,000. During 2008 Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units. From the information given, compute the depreciation charge for 2008 under each of the following methods. (Round to the nearest dollar.) (a) Straight-line, (b) Units-of-output, (c) Working hours, (d) Sum-of-the-years' digits, and (e) Declining balance (use 20% as the annual rate). We need to find the depreciable value and use it for methods a, b, c and d Depreciable value = Cost – Salvage Value Depreciable Value = \$315,000 – \$15,000 = \$300,000 (a) Under straight line method Depreciation = Depreciable value/useful life In 2008 the depreciation will be for full year Depreciation per year = \$300,000 / 10 yrs. = \$30,000 for 2008 (b) In finding the depreciation under units of output, we calculate the depreciation per

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e11-4 - Jon Seceda Furnace Corp purchased machinery for...

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