On January 1, 2013, a machine was purchased for \($90\),000. The machine has an estimated residual value of \($6\),000 and an estimated useful life of 5 years. The machine can operate for 100,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2013, 20,000 hours; 2014, 25,000 hours; 2015, 15,000 hours; 2016, 30,000 hours; and 2017, 10,000 hours.

Instructions

(a) Compute the annual depreciation charges over the machine’s life assuming a December 31 yearend for each of the following depreciation methods.
(1) Straight-line method. (3) Sum-of-the-years’-digits method.
(2) Activity method. (4) Double-declining-balance method.

(b) Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods.
(1) Straight-line method. (3) Double-declining-balance method.
(2) Sum-of-the-years’-digits method.