Gazza Ltd acquires a machine for a cost of $29 000. It is expected that the machine will continue to be operational for seven years, during which time it is expected to run for 35 000 hours. The estimated residual value of the machine is $7000 at the end of its useful life.
Required
Calculate the depreciation charge for each of the first three years, using the following methods:
(a) the straight-line method
(b) the sum-of-digits method
(c) the declining-balance method, using a 33 per cent rate
(d) the units-of-production method, based on hours of operation, given that operating times are as follows:
year 1 6000 hours
year 2 7000 hours
year 3 5500 hours LO 5.4