Question
In order to improve its business processes, Martin Corp. Ltd. purchased a new machine on July 1, 2017. The cost price of the machine was
In order to improve its business processes, Martin Corp. Ltd. purchased a new machine on July 1, 2017. The cost price of the machine was $1,250,000. Martin Corp. estimated that the machine will have a useful life of 5 years at the end of which its salvage value will be $32,000. The machine is estimated to produce 496,000 units and work 62,000 hours. . During 2017, Martin Corp. used the machine for 6,000 hours and produced 52,000 units. Martin Corp. financial year ends December 31 and it depreciates this item of PPE on the basis of the nearest full month. Required: Note Each calculation should be considered unrelated. Round dollar values computed to 2 decimal places.
Calculate depreciation expense under the following: a) Straight line method for 2017. (5 marks) b) Activity method for 2017, using units of output. (5 marks) c) Activity method for 2017, using working hours. (5 marks) d) Sum of the years digit method for 2018. (11 marks) e) Double declining balance method for 2018. (10 marks
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