Question

Depreciation Methods On January 2, 2015, Roth, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $100,000, and its estimated useful life was four years or 950,000 cuttings, after which it could be sold for $5,000. Required a. Calculate each year's depreciation expense for the machine's useful life under each of the following depreciation methods (round all answers to the nearest dollar): 1. Straight-line. 2. Double-declining balance. 3. Units-of-production. (Assume annual production in cuttings of 220,000; 370,000; 300,000; and 60,000.) 1. Straight-Line Depreciation Year Expense 2015 $ 23,750 2016 23,750 2017 23,750 2018 23,750 2. Double-declining balance Depreciation Year Expense 2015 $ 50,000 2016 25,000 2017 12,500 2018 6,250 2019 Ox

Answer 1

2. Double declining balance

Depreciation for Year 2019 = ($100,000 - $50,000 - $25,000 - $12,500 - $6,250) X 50%

= $3,125

3. Units of production

Depreciation per unit = ($100,000 - $5,000) / 950,000 = $0.10 per units

Depreciation expense = Units produced X Depreciation per unit

Year	Depreciation expense
2015	$22,000 (220,000 X $0.10)
2016	$37,000 (370,000 X $0.10)
2017	$30,000 ($300,000 X $0.10)
2018	$60,000 ($60,000 X $0.10)