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    Depreciation Expense

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    On January 1, 2003, Eiger Company purchased a new piece of machinery. The machine cost $200,000. Optional equipment for the machine was also purchased at a cost of $14,000. The manufacturer charged 1,400 to install the option. The estimated life of the machine was 7 years and the estimated service life of the machine in hours was 21,000. The estimated salvage value of the machine was $4,000. The machine was used for 2,700 hours in 2005.

    Compute depreciation expense for 2005 under each of the following methods:

    A) Straight-Line
    B) Double Declining Balance
    C) Sum Of The Years Digits
    D) Service Hours
    E) MACRS (Using The Following Rates):

    YEAR 1 14.29%
    YEAR 2 24.49%
    YEAR 3 17.49%
    YEAR 4 12.49%
    YEAR 5 8.93%
    YEAR 6 8.92%
    YEAR 7 8.93%
    YEAR 8 4.46%

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    Solution Summary

    The solution calculates the Depreciation Expense under Straight-Line, Double Declining Balance, Sum Of The Years Digits, Service Hours and MACRS methods.