Depreciation Methods

Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates:

Service life	5 years or 10,000 hours
Production	180,000 units
Residual value	$ 18,000

In 2019, Gruman uses the machine for 2,000 hours and produces 40,000 units. In 2020, Gruman uses the machine for 1,400 hours and produces 30,000 units. If required, round your final answers to the nearest dollar.

Required:

1. Compute the depreciation for 2019 and 2020 under each of the following methods:

1. Straight-line method

   2019	$ fill in the blank 1
   2020	$ fill in the blank 2

2. Sum-of-the-years'-digits method

   2019	$ fill in the blank 3
   2020	$ fill in the blank 4

3. Double-declining-balance method

   2019	$ fill in the blank 5
   2020	$ fill in the blank 6

4. Activity method based on hours worked

   2019	$ fill in the blank 7
   2020	$ fill in the blank 8

5. Activity method based on units of output

   2019	$ fill in the blank 9
   2020	$ fill in the blank 10

2. For each method, what is the book value of the machine at the end of 2019? At the end of 2020?

1. Straight-line method

   2019	$ fill in the blank 11
   2020	$ fill in the blank 12

2. Sum-of-the-years'-digits method

   2019	$ fill in the blank 13
   2020	$ fill in the blank 14

3. Double-declining-balance method

   2019	$ fill in the blank 15
   2020	$ fill in the blank 16

4. Activity method based on hours worked

   2019	$ fill in the blank 17
   2020	$ fill in the blank 18

5. Activity method based on units of output

   2019	$ fill in the blank 19
   2020	$ fill in the blank 20

3. If Gruman used a service life of 8 years or 15,000 hours and a residual value of $9,000 , 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

1. Straight-line method

   2019	$ fill in the blank 21
   2020	$ fill in the blank 22

2. Sum-of-the-years'-digits method

   2019	$ fill in the blank 23
   2020	$ fill in the blank 24

3. Double-declining-balance method

   2019	$ fill in the blank 25
   2020	$ fill in the blank 26

Book value

1. Straight-line method

   2019	$ fill in the blank 27
   2020	$ fill in the blank 28

2. Sum-of-the-years'-digits method

   2019	$ fill in the blank 29
   2020	$ fill in the blank 30

3. Double-declining-balance method

   2019	$ fill in the blank 31
   2020	$ fill in the blank 32