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.
Cost
315,000
Salvage
15,000
Basis
300,000
Useful life
10 years
$30,000
(b) Units-of-output.
Basis
300,000
Est. units
240,000
Depr./unit
1.25
2008 units
25,500
$31,875
(c) Working hours.
Basis
300,000
Est. hours
25,000
Depr./unit
12.00
2008 hours
2,650
$31,800
(d) Sum-of-the-years’-d
55
1st year
18,182
2nd year
32,727
$50,909
(e) Declining-balance (use 20% as the annual rate).
1st year
21,000
2nd year
33,600
$54,600