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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
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 34,000 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 {2016520175xx b. Sum-of-the-years'-digits method 20165x c. Double-declining-balance method d. Activity method based on hours worked 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 a. Straight-line method 2016$2017$ b. Sum-of-the-years'-digits method c. Double-declining-balance method 2016$2017$ Book value a. Straight-line method 20165 b. Sun'-of-the-years'-digits method 20155 Book value a. Straight-line method
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