week 4 ind acct 422 - WEEK 4 ASSIGNMENT

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WEEK 4 ASSIGNMENT E11-4 (Depreciation Computations—Five Methods) 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 240,000 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. Instructions From the information given, compute the depreciation charge for 2008 under each of the  following methods. (Round to the nearest dollar.) (a) Straight-line /Dep = cost - salvage 315,000-15,000= 30,000 (b) Units-of-output/ Dep= cost -salvage /units 30,000/240,000=1.25 per unit x 25,500=31,875 (c) Working hours 30,000/25,000=12 per hr x 2,650 = 31,800 (d) Sum-of-the-years’-digits/ cost - salvage value x remaining life/sum of the digits  2007= 315,000- 15,000 x 10(10+9+8+7+6+5+4+3+2+1)x8/12  =300,000x 10/55 x 8/12=36,364 2008= 315,000 x 10/55 x 4/12 / 300,000 x 9/55 x 8/12 =18,182/32,727=50,909 (e) Declining-balance (use 20% as the annual rate)=  315,000x20%x1/3=21,000 dep for 2008= 231,000x20%= 46,200 E11-11
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week 4 ind acct 422 - WEEK 4 ASSIGNMENT

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