Question

Problem 10-2A Depreciation methods LO P1 A machine costing $211,200 with a four-year life and an estimated $16,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 488,000 units of product during its life. It actually produces the following units: 122,200 in 1st year, 122,700 in 2nd year, 121,200 in 3rd year, 131,900 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate-this difference was not predicted. (The machine must not 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.) Complete this question by entering your answers in the tabs below. Units of Straight Line DDB Production Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Straight-line depreciation Straight-Line Depreciation Depreciation Expense Year 1 2 4 Total

Answer 1

Straight Line
Date	Cost of asset	Depreciable cost	Useful life	Depreciation expenses	Accumulated Depreciation	Book value
Year 1	$2,11,200	$1,95,200	4 Years	$48,800	$48,800	$1,62,400
Year 2	$2,11,200	$1,95,200	4 Years	$48,800	$97,600	$1,13,600
Year 3	$2,11,200	$1,95,200	4 Years	$48,800	$1,46,400	$64,800
Year 4	$2,11,200	$1,95,200	4 Years	$48,800	$1,95,200	$16,000
Units of production
Date	Cost of asset	Depreciation per units	No. of units	Depreciation expenses	Accumulated Depreciation	Book value
Year 1	$2,11,200	$0.40	122200	$48,880	$48,880	$1,62,320
Year 2	$2,11,200	$0.40	122700	$49,080	$97,960	$1,13,240
Year 3	$2,11,200	$0.40	121200	$48,480	$1,46,440	$64,760
Year 4(No. of units is adjusted for salvage value)	$2,11,200	$0.40	121900	$48,760	$1,95,200	$16,000
Double Declining balance
Date	Cost of asset	Book Value	DDB Rate	Depreciation expenses	Accumulated Depreciation	Book value
Year 1	$2,11,200	$2,11,200	50.00%	$1,05,600	$1,05,600	$1,05,600
Year 2	$2,11,200	$1,05,600	50.00%	$52,800	$1,58,400	$52,800
Year 3	$2,11,200	$52,800	50.00%	$26,400	$1,84,800	$26,400
Year 4(Depreciation is adjusted)	$2,11,200	$26,400	50.00%	$10,400	$1,95,200	$16,000