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Expert-verified Found in: Page 595 ### Intermediate Accounting (Kieso)

Book edition 16th
Author(s) Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Pages 1552 pages
ISBN 9781118743201

# (Depreciation for Partial Periods—SL, Act., SYD, and DDB) On January 1, 2015, a machine was purchased for $90,000. The machine has an estimated salvage value of$6,000 and an estimated useful life of 5 years. The machine can operate for 100,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 20,000 hours; 2016, 25,000 hours; 2017, 15,000 hours; 2018, 30,000 hours; and 2019, 10,000 hours.Instructions(a) Compute the annual depreciation charges over the machine’s life assuming a December 31 year-end for each of the following depreciation methods. Straight-line method. Activity method. Sum-of-the-years’-digits method. Double-declining-balance method.(b) Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods. Straight-line method. Sum-of-the-years’-digits method.Double-declining-balance method

The basic formula to calculate depreciation expense is: See the step by step solution

## Step 1: Meaning of Depreciation

Depreciation is a branch of accounting that deals with systematically spreading or dividing the cost or other principal value of a fixed asset over its expected useful life by charging regular expenses or revenues.

## Step 2: (a 1) Computing depreciation under the straight-line method

Calculating depreciation expense ## Step 3: (a2) Computing depreciation using the activity method

Calculating depreciation expense ## Step5: (a 4) Computing depreciation using the Double-declining-balance method

Double-Declining-Balance Method: Each year is 20% of its total life. Double the rate to 40%. ## Step 6: (b 1) Computing depreciation using the Straight-line method

Calculating depreciation expense for 2015 Year Calculation Result 2015 For 9 months \$12,000 2016 Full year 16,800 2017 Full year 16,800 2018 Full year 16,800 2019 Full year 16,800 2020 4,200

## Step 7: (b 2) Computing depreciation using the Sum-of-the-years’-digits method.

Calculating depreciation expense ## Step 8: (b 3) Computing depreciation using the Double-declining-balance method ## Recommended explanations on Business-studies Textbooks

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