Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help on the incorrect answers. Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates: Service

Need help on the incorrect answers.

image text in transcribedimage text in transcribedimage text in transcribed

Depreciation Methods Gruman Company purchased a machine for $198,000 on January 2, 2019. It made the following estimates: Service life 5 years or 10,000 hours 180,000 units Production Residual value $ 18,000 In 2019, Gruman uses the machine for 2,000 hours and produces 50,000 units. In 2020, Gruman uses the machine for 1,200 hours and produces 32,000 units. If required, round your final answers to the nearest dollar. Required: 1. Compute the depreciation for 2019 and 2020 under each of the following methods: a. Straight-line method 2019 $ 36,000 2020 $ 36,000 b. Sum-of-the-years'-digits method 2019 $ 60,000 2020 $ 48,000 c. Double-declining-balance method 2019 $ 79,200 2020 $ 47,520 d. Activity method based on hours worked 2019 $ 36,000 2020 $ 25,200 X e. Activity method based on units of output 2019 $ 45,000 X 2020 $ 34,000 X 2. For each method, what is the book value of the machine at the end of 2019? At the end of 2020? a. Straight-line method 2019 $ 162,000 2020 $ 126,000 b. Sum-of-the-years'-digits method 2019 $ 138,000 2020 $ 90,000 c. Double-declining-balance method 2019 $ 118,800 2020 $ 70,480 X d. Activity method based on hours worked 2019 $ 162,000 2020 $ 136,800 X e. Activity method based on units of output 2019 $ 153,000 X 2020 $ 119,000 X 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 2019 $ 23,625 2020 $ 23,625 b. Sum-of-the-years'-digits method 2019 $ 42,000 2020 $ 36,750 c. Double-declining-balance method 2019 $ 49,500 2020 $ 37,125 Book value a. Straight-line method. 2019 $ 174,375 2020 $ 127,125 X b. Sum-of-the-years'-digits method 2019 $ 156,000 2020 $ 119,250 c. Double-declining-balance method 2019 $ 148,500 2020 $ 111,375

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

Blockchain Techonology In Accounting And Auditing

Authors: Prof Oleksandr Melnychenko

1st Edition

1976900328, 978-1976900327

More Books

Students also viewed these Accounting questions

Question

=+3. What are the organization's task goals on this issue?

Answered: 1 week ago

Question

5. Understand how cultural values influence conflict behavior.

Answered: 1 week ago

Question

e. What do you know about your ethnic background?

Answered: 1 week ago