Question
Jensen Company purchased a new machine on September 1, 2010, at a cost of $120,000. The company estimated that the machine has a salvage value
Jensen Company purchased a new machine on September 1, 2010, at a cost of $120,000. The company estimated that the machine has a salvage value of $8,000. The machine is expected to be used for 70,000 working hours during its 8-year life.
Instructions
Compute depreciation using the following methods in the year indicated.
(a) Straight-line for 2010 and 2011, assuming a December 31 year-end.
(b) Declining balance using double the straight-line rate for 2010 and 2011.
(c) Units-of-activity for 2010, assuming machine usage was 2,900 hours. (Round depreciation per unit to the nearestcent.)
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