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Depreciation for Partial Periods: Boris Becker, Inc

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The cost of equipment purchased by Boris Becker, Inc., on June 1, 2007 is $67,000. It is estimated that the machine will have a $4,000 salvage value at the end of its service life. Its service life is estimated at 7 years; its total working hours are estimated at 42,000 and its total production is estimated at 525,000 units. During 2007 the machine was operated 6,000 hours and produced 55,000 units. During 2008 the machine was operated 5,500 hours and produced 48,000 units.

Instructions
Compute depreciation expense on the machine for the year ending December 31, 2007, using the following methods.
a) Straight-line.
b) Units-of-output.
c) Working hours.
d) Sum-of-the-years'-digits.
e) Declining balance (twice the straight-line rate).
Please provide all computation as well.
Thank you.

Solution Preview

The cost of equipment purchased by Boris Becker, Inc., on June 1, 2007 is $67,000. It is estimated that the machine will have a $4,000 salvage value at the end of its service life. Its service life is estimated at 7 years; its total working hours are estimated at 42,000 and its total production is estimated at 525,000 units. During 2007 the machine was operated 6,000 hours and produced 55,000 units. During 2008 the machine was operated 5,500 hours and ...

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