Question

A machine costing $211,200 with a four-year life and an estimated $18,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 483,000 units of product during its life. It actually produces the following units: 122,700 in Year 1, 123,200 in Year 2, 119,900 in Year 3, 127,200 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted. (The machine cannot be depreciated below its estimated salvage value.)

Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. (Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.)

Please answer in that format

LUPIELE LIIS JUDLIUM Uy enter your answers HR LITE LOUS VEUW. Straight Line Units of Production DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under th depreciation. Straight-Line Depreciation Year Depreciation Expense 1 2 3 Total $ 0 Straight Line Units of Production >

Answer 1

Solutions:

Depreciation Schedule - Straight Line
Year	Depreciation Expense [($211,200-18,000)/4]	Accumulated Depreciation	Net Book Value
At Acquisition			$2,11,200.00
1	$48,300.00	$48,300.00	$1,62,900.00
2	$48,300.00	$96,600.00	$1,14,600.00
3	$48,300.00	$1,44,900.00	$66,300.00
4	$48,300.00	$1,93,200.00	$18,000.00
Total	$1,93,200.00

Depreciation per unit = (211200- 18000)/ 483000 = $0.40 per unit

Depreciation Schedule - Unit of Production
Year	Depreciable units	Depreciation per unit	Depreciation Expense	Accumulated Depreciation	Net Book Value
At Acquisition					$2,11,200.00
1	122700	$0.40	$49,080.00	$49,080.00	$1,62,120.00
2	123200	$0.40	$49,280.00	98,360.00	$1,12,840.00
3	119900	$0.40	$47,960.00	1,46,320.00	$64,880.00
4	117200	$0.40	$46,880.00	1,93,200.00	$18,000.00
Total	483000		$1,93,200.00

Depreciation Schedule - Double Declining Balance Method
	DDB Depreciation for the Period			End of Period
Year	Beginning of period book value	Depreciation Rate	Depreciation expense	Accumulated expense	Book Value
1	$2,11,200	50%	$1,05,600	1,05,600.00	1,05,600.00
2	$1,05,600	50%	$52,800	1,58,400.00	52,800.00
3	$52,800	50%	$26,400	1,84,800.00	26,400.00
4	$26,400	Balance	$8,400	1,93,200.00	18,000.00
Total			$1,93,200