On July 1, 2015 Dolby Corp purchased some new equipment to be used in their recording studio. The equipment cost $70,000 and it is expected to have a salvage value of $8,000 after its useful life of 6 years. It is estimated that the machine will be used for 32,000 hours of recording over the 6 years. Dolby used the equipment for 8,000 hours and 9,000 hours for the years 2015 and 2016 respectively. MACRS (tax) depreciation specifies a five-year recovery period for this asset.

The IRS table shows the following percentages for depreciation:

year percentage

first 20%

second 32%

third 19.20%

fourth 11.52%

fifth 11.52%

sixth 5.76%

Calculate the depreciation expense for 2015 and for 2016 using

(a) the straight-line method,

(b) the DDB method,

(c) the units of activity method, and

(d) the MACRS method.

Answer rating: 100% (QA)

a Straightline Method Annual Depreciation 70000 80006 1033333 Dep... View the full answer