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.

Question

Business

Guzman

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.

+5

Answers (1)

Know the Answer?

Reece Norris · Answer 1

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