On January 1, 2016, Canseco Plumbing Fixtures purchased equipment for $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The company expects the machine to operate for 10,000 hours. Calculate depreciation expense for 2016 and 2017 using each of the following depreciation methods: (a) straight line, (b) sum-of-the-years’-digits, (c) double-declining balance, and (d) units-of-production using machine hours. The machine operated for 2,200 and 3,000 hours in 2016 and 2017, respectively.

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Asked Jan 27, 2020
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On January 1, 2016, Canseco Plumbing Fixtures purchased equipment for $30,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The company expects the machine to operate for 10,000 hours. Calculate depreciation expense for 2016 and 2017 using each of the following depreciation methods: (a) straight line, (b) sum-of-the-years’-digits, (c) double-declining balance, and (d) units-of-production using machine hours. The machine operated for 2,200 and 3,000 hours in 2016 and 2017, respectively.

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Expert Answer

Step 1

(a) Straight-line method: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Accounting homework question answer, step 1, image 1
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Step 2

(b) Sum-of- the-years’ digits method: Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Accounting homework question answer, step 2, image 1
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Step 3

(c) Double-declining-balance method: It is an accelerated method of depreciation under which the depreciation declines in each successive year until the value of asset becomes zero. Under this met...

Accounting homework question answer, step 3, image 1
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