Jon Bonjovi Guitar Corp. purchased machinery on May 1, 2020. The following are provided concerning the machinery. Machinery cost $ 315,000 Estimated salvage value 15,000 Estimated useful life 10 years Estimated production 240,000 units Estimated working hours 25,000 hours Actual hours used in 2021 2,650 hours Actual units produced in 2021 25,500 units Instructions: From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round to the nearest dollar.)Please show all steps (e) Declining-balance (use 20% as the annual rate). $
Jon Bonjovi Guitar Corp. purchased machinery on May 1, 2020. The following are provided concerning the machinery. Machinery cost $ 315,000 Estimated salvage value 15,000 Estimated useful life 10 years Estimated production 240,000 units Estimated working hours 25,000 hours Actual hours used in 2021 2,650 hours Actual units produced in 2021 25,500 units Instructions: From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round to the nearest dollar.)Please show all steps (e) Declining-balance (use 20% as the annual rate). $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Jon Bonjovi Guitar Corp. purchased machinery on May 1, 2020. The following are provided concerning the machinery. | |||||||
Machinery cost | $ 315,000 | ||||||
Estimated salvage value | 15,000 | ||||||
Estimated useful life | 10 | years | |||||
Estimated production | 240,000 | units | |||||
Estimated working hours | 25,000 | hours | |||||
Actual hours used in 2021 | 2,650 | hours | |||||
Actual units produced in 2021 | 25,500 | units | |||||
Instructions: | |||||||
From the information given, compute the |
|||||||
(e) | Declining-balance (use 20% as the annual rate). | ||||||
$ | |||||||
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