Question

A machine costing $212,600 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 484,000 units of product during its life. It actually produces the following units: 123,100 in Year 1, 123,500 in Year 2, 121,000 in Year 3, 126,400 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.) Complete this question by entering your answers in the tabs below.

Answer 1

1) Depreciation : Units of production method

	Units of production
Year	Units	Depreciable unit	Depreciation per unit	Depreciation expense
1	123100	123100	0.40	49240
2	123500	123500	0.40	49400
3	121000	121000	0.40	48400
4	126400	116400	0.40	46560
Total		484000		193600

2) Double decline balance method

	DDB Depreciation for the period			End of period
Year	Beginning of period book value	Depreciation rate	Depreciation expense	Accumulated depreciation	Book value
1	212600	50%	106300	106300	106300
2	106300	50%	53150	159450	53150
3	53150	50%	26575	186025	26575
4	26575	50%	7575	193600	19000
Total			193600