Question

Crane Company purchased a new machine on October 1, 2017, at a cost of $89,920. The company estimated that the machine has a salvage value of $9,440. The machine is expected to be used for 71,300 working hours during its 8-year life. Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end. (Round answers to 0 decimal places)

Answer 1

2017 depreciation expense= 10,060*3/12=$2,515

2018 depreciation expense=$10,060

Step-by-step explanation:

The depreciation expense of machine for the whole year shall be calculated as follows:

Depreciation expense=[(89,920-9,440)/8]=$10,060

Since the machine is only used for 3 months in the year ended December 31, 2017, therefore the depreciation expense in 2017 will be calculated as follows

2017 depreciation expense= 10,060*3/12=$2,515

2018 depreciation expense=$10,060