An equipment was purchased at a cost of $34,400 on September 1, 2010. The equipment has an estimated residual value of $2,990 and an estimated useful life of five years or 19,200 hours. Assume the equipment was used for 1,090 hours from September 1 to December 31.

An equipment was purchased at a cost of $34,400 on September 1, 2010. The equipment has an estimated residual value of $2,990 and an estimated useful life of five years or 19,200 hours. Assume the equipment was used for 1,090 hours from September 1 to December 31.

 

Required:

Calculate the amount of depreciation to report during the year ended December 31, using following methods(Round your answers to the nearest dollar amount. Omit the "$" sign in your response):

Straight-line	$
Double-declining-balance	$
Units-of-production	$

 

Explanation:

Annual straight-line depreciation	=	(Cost – Residual Value) x 1/Useful Life
	=	($34,400 – $2,990) x 1/5 years
	=	$6,282 per year

 

September 1 - December 31 = 4 months, so depreciation is $6,282 x 4/12 = $2,094.

 

Double-declining-balance	=	(Cost – Accumulated Depreciation) x 2/Useful Life
Year 1 Depreciation	=	($34,400 – $0) x 2/5
	=	$13,760 for the year

 

September 1 - December 31 = 4 months, so depreciation is $13,760 x 4/12 = $4,587.

 

Units-of-production	=	(Cost – Residual Value) x Actual /Estimated Total Production
		($34,400 – $2,990) x 1,090/19,200 = $1,783.