Question

A machine costing $214,600 with a four-year life and an estimated $17,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 494,000 units of product during its life. It actually produces the following units: 123,000 in 1st year, 122,600 in 2nd year, 121,000 in 3rd year, 137,400 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 Straight Line Production DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Straight-line depreciation Straight-Line Depreciation Year Depreciation Expense Total

Answer 1

Straight Line depreciation :
year	Depreciation Expense
1	49400	(214600-17000)/4
2	49400
3	49400
4	49400
Total	197600
Units of Production method of depreciation:
Year	Depreciable units	Depreciation per unit	Depreciation expense
1	123000	(Cost - salvage)/Life units produced	49200
2	122600	(214600-17000)/494000	49040
3	121000	0.4	48400
4	137400		50960	(197600-49200-49040-48400)
Total	504000		197600
salvage			17000
Machine cost			214600
DDB depreciation method:
year	Begin BV	Depreciation rate	Depreciation Exp.	Acc. Dep.	Book Value
0					214600
1	214600	SL dep. Rate * 2 = 100/4 = 25% *2 = 50%	107300	107300	107300
2	107300	50%	53650	160950	53650
3	53650	50%	26825	187775	26825
4	26825		26825-17000 = 9825	197600	17000	salvage
Total			197600