Question
Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2016: Purchase price $ 82,500 Delivery cost $ 3,000
Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2016: |
Purchase price | $ | 82,500 | |
Delivery cost | $ | 3,000 | |
Installation charge | $ | 1,000 | |
Estimated life | 5 | years | |
Estimated units | 157,000 | ||
Salvage estimate | $ | 8,000 | |
During 2016, the machine produced 53,000 units and during 2017, it produced 55,000 units. |
Required: |
a. | Determine the amount of depreciation expense for 2016 and 2017 using straight-line method. |
b. | Determine the amount of depreciation expense for 2016 and 2017 using double-declining-balance method. |
c. | Determine the amount of depreciation expense for 2016 and 2017 using units of production method. |
d. | Determine the amount of depreciation expense for 2016 and 2017 using MACRS, assuming that the machine is classified as seven-year property. (Round your answers to the nearest dollar amount.) |
MACRS table: |
Year | 5-Year property,% | 7-Year property,% | ||||
1 | 20.00 | 14.29 | ||||
2 | 32.00 | 24.49 | ||||
3 | 19.20 | 17.49 | ||||
4 | 11.52 | 12.49 | ||||
5 | 11.52 | 8.93 | ||||
6 | 5.76 | 8.92 | ||||
7 | 8.93 | |||||
8 | 4.46 | |||||
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started