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21 September, 12:29

Cactus Company purchased a new machine on August 1, 2017. At that time, the original cost of the machine was recorded at $180,000 with an estimated salvage value of $20,000. Total service hours expected for this machine is 100,000. During 2017, the machine was used for 825 hours. During 2018, the machine was used for 3,115 hours.

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  1. 21 September, 16:12
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    Cactus Company purchased a new machine on August 1, 2017. At that time, the original cost of the machine was recorded at $180,000 with an estimated salvage value of $20,000. Total service hours expected for this machine is 100,000. During 2017, the machine was used for 825 hours. During 2018, the machine was used for 3,115 hours.

    Annual depreciation = [ (original cost - salvage value) / useful life of production in units]*units produced

    Year 1 = [ (180,000 - 20,000) / 100,000]*825 = $1,320

    Year 2 = 1.6*3,115 = $4,984
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