Question - Hearsa Manufacturing Inc. purchased a new machine on January 2, 2008, that was built to perform one function on its assembly line. Data pertaining to this machine are:
Acquisition cost $330,000
Residual value $30,000
Estimated service life:
Years 5
Service hours 250,000
Production output 300,000
Using each of the following methods, compute the annual depreciation rate and charge for the years ended December 31, 2008 and 2009:
(1) Straight-line
(2) Service hours (assume 32,000 hours for 2008 and 36,000 hours for 2009).
(3) Productive-output (assume 31,000 units for 2008 and 37,000 units for 2009).