Problem
On January 1, 2018, a machine was purchased for $122,500. The machine has an estimated salvage value of $7,300 and an estimated useful life of 5 years. The machine can operate for 120,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018, 24,000 hrs; 2019, 30,000 hrs; 2020, 18,000 hrs; 2021, 36,000 hrs; and 2022, 12,000 hrs.
a) Compute the annual depreciation charges over the machine's life assuming a December 31 year-end for each of the following depreciation methods.
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.