The Gruman Company
The Gruman Company purchased a machine for $ 220,000 on January 2, 2013. It made the following estimates:
| Service life | 5 years or 10,000 hours |
| Production | 200,000 units |
| Residual value | $ 20,000 |
In 2013, Gruman uses the machine for 1,800 hours and produces 44,000 units. In
2014, Gruman uses the machine for 1,500 hours and produces 35,000 units. If
required, round your final answer to the nearest dollar.
Required:
- Compute
the depreciation for 2013 and 2014 under each of the following methods:
- Straight-line method
| 2013 | $ |
| 2014 | $ |
- Sum-of-the-years’-digits method
| 2013 | $ |
| 2014 | $ |
- Double-declining-balance method
| 2013 | $ |
| 2014 | $ |
- Activity method based on hours worked
| 2013 | $ |
| 2014 | $ |
- Activity method based on units of output
| 2013 | $ |
| 2014 | $ |
- For each
method, what is the book value of the machine at the end of 2013? At the end of
2014?
- Straight-line method
| 2013 | $ |
| 2014 | $ |
- Sum-of-the-years’-digits method
| 2013 | $ |
| 2014 | $ |
- Double-declining-balance method
| 2013 | $ |
| 2014 | $ |
- Activity method based on hours worked
| 2013 | $ |
| 2014 | $ |
- Activity method based on units of output
| 2013 | $ |
| 2014 | $ |
- If Gruman used a service life of 8 years or 15,000 hours and a residual value of $10,000, what would be the effect on the following under the straight-line, sum-of-the-years’-digits, and double-declining-balance depreciation methods?
Depreciation expense
- Straight-line method
| 2013 | $ |
| 2014 | $ |
- Sum-of-the-years’-digits method
| 2013 | $ |
| 2014 | $ |
- Double-declining-balance method
| 2013 | $ |
| 2014 | $ |
Book value
- Straight-line method
| 2013 | $ |
| 2014 | $ |
- Sum-of-the-years’-digits method
| 2013 | $ |
| 2014 | $ |
- Double-declining-balance method
| 2013 | $ |
| 2014 | $ |
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
