Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 2,000 hours and produces 50,000 units. In 2017, Gruman uses the machine for 1,400 hours and produces 30,000 units. If required, round your final answers to the nearest dollar.

1: Compute the depreciation for 2016 and 2017 under each of the following methods. 2: For each method, what is the book value of the machine at the end of 2016? At the end of 2017? 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?

I"ve already done question part 1 and two, I only provided them as background information. I just need question 3.

Depreciation expense

  1. Straight-line method
    2016 $
    2017 $
  2. Sum-of-the-years'-digits method
    2016 $
    2017 $
  3. Double-declining-balance method
    2016 $
    2017 $

Book value

  1. Straight-line method
    2016 $
    2017 $
  2. Sum-of-the-years'-digits method
    2016 $
    2017 $
  3. Double-declining-balance method
    2016 $
    2017 $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

CIA Exam Practice Questions Certified Internal Auditor

Authors: The Internal Audit Foundation

1st Edition

163454045X, 978-1634540452

More Books

Students also viewed these Accounting questions