Depreciation Methods: Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following
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Question:
Depreciation Methods:
Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following estimates:
-Service life 5 years or 10,000 hours
-Production 180,000 units
-Residual value $18,000
In 2016, Gruman uses the machine for 1,700 hours and produces 50,000 units. In 2017, Gruman uses the machine for 1,200 hours and produces 32,000 units. If required, round your final answers to the nearest dollar.
A. For each method, what is the book value of the machine at the end of 2016? At the end of 2017?
- Activity method based on hours worked
-2016___________ (I got 30,600 and that is wrong)
-2017__________ (I got 21,600 and that is wrong)
- Activity method based on units of output
-2016____________ (I got 50,000 and that is wrong)
-2017____________ (I got 32,000 and that is wrong)
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