On January 2, 2024, a new machine was acquired for ₱440,000. The machine has an estimated salvage value of ₱40,000 and an estimated useful life of 5 years. The machine is expected to produce a total of 800,000 units and work for 50,000 hours throughout its useful life. The company used the machinery for 3,000 hours in 2024 and 5,000 hours in 2025. The machinery produced 150,000 units in 2024 and 180,000 units in 2025.Compute the depreciation for 2026 using sum-of-years’ digit (SYD) method.
Question
On January 2, 2024, a new machine was acquired for ₱440,000. The machine has an estimated salvage value of ₱40,000 and an estimated useful life of 5 years. The machine is expected to produce a total of 800,000 units and work for 50,000 hours throughout its useful life. The company used the machinery for 3,000 hours in 2024 and 5,000 hours in 2025. The machinery produced 150,000 units in 2024 and 180,000 units in 2025.Compute the depreciation for 2026 using sum-of-years’ digit (SYD) method.
Solution
To compute the depreciation for 2026 using the sum-of-years' digit (SYD) method, follow these steps:
-
Determine the total cost of the machine, which is ₱440,000.
-
Subtract the salvage value from the total cost to get the depreciable amount. In this case, ₱440,000 - ₱40,000 = ₱400,000.
-
Determine the sum of the years' digits. Since the machine has a useful life of 5 years, the sum of the years' digits is 1+2+3+4+5 = 15.
-
Determine the fraction for the year 2026. Since 2026 is the third year of the machine's useful life, the fraction is 3/15.
-
Multiply the depreciable amount by the fraction to get the depreciation for 2026. In this case, ₱400,000 * (3/15) = ₱80,000.
So, the depreciation for 2026 using the sum-of-years' digit method is ₱80,000.
Similar Questions
A machine worth of Rs. 4,90,740 is depreciated at 15% on its opening valueeach year. When its value reduces to Rs. 2,00,000(a) 4 years 6 months(b) 4 years 7 months(c) 4 years 5 months(d) 5 years 7 months approximately
Machinery is purchased for $140,000. It is estimated that it has a useful life of 5 years and a residual value of $20,000. Using the straight-line method, the balance in the accumulated depreciation account at the end of the third year of the machine’s useful life is:$68,000$140,000$72,000$24,000
A factory machine was purchased for P75,000 on January 1, 2008. It was estimated that it would have a P15,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2008. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2008 would be
A machine is purchased for $60 000. It is estimated that it has a useful life of 5 years and will then be sold for $5000. Using the straight-line method, calculate the amount of depreciation to be charged for each year of useful life.Group of answer choices$5000$12 000$0$11 000
A machine with a cost of Sh 205,000 has an estimated salvage value of Sh 15,000 and an estimated useful life of 20 years or 9,500 hours. It is to be depreciated using the units-of-activity method of depreciation. (a) The rate of depreciation is Sh per hour. (b) The amount of depreciation for the second full year, during which the machine was used for 5,000 hours is Sh
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.