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Depreciation Methods Gruman Company purchased a machine for $220,000 on January 2, 2016. It made the following estimates: Service life 5 years or 10,000 hours
Depreciation Methods Gruman Company purchased a machine for $220,000 on January 2, 2016. It made the following estimates: Service life 5 years or 10,000 hours Production Residual value 200,000 units $20,000 In 2016, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2017, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answers to the nearest dollar. Required: 1. Compute the depreciation for 2016 and 2017 under each of the following methods: a. Straight-line method 2016 $ 40,000 2017 $ 40,000 b. Sum-of-the-years'-digits method 2016 $ 66,667 2017 $ 53,333 c. Double-declining-balance method 2016 $ 2017 $ 40,000 X 48,000 X d Activity method based on hours worked 2. For each method, what is the book value of the machine at the end of 2016? At the end of 2017? a. Straight-line method 2016 $ 40,000 X 2017 $ b. Sum-of-the-years'-digits method 2016 $ 2017 $ c. Double-declining-balance method 2016 $ 2017 $ d. Activity method based on hours worked 2016 $ 2017 $ e. Activity method based on units of output 2016 $ 2017 $
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