Question

Assume Organic Ice Cream Company, Inc., bought a new ice cream production kit (pasteurizer/homogenizer, cooler, aging vat, freezer, and filling machine) at the beginning of the year at a cost of $20,000. The estimated useful life was four years, and the residual value was $2.180. Assume that the estimated productive life of the machine was 9,900 hours. Actual annual usage was 3,960 hours in Year 1; 2,970 hours in Year 2; 1,980 hours in Year 3; and 990 hours in Year 4. Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1c Complete a depreciation schedule using the Straight-line method. (Do not round intermediate calculations.) Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition

Answer 1

a) Straight line

Year	Depreciation expense	Accumulated depreciation	Net book value
at acquisition			20000
1	(20000-2180/4) = 4455	4455	15545
2	4455	8910	11090
3	4455	13365	6635
4	4455	17820	2180

b) Unit of production

Year	Depreciation expense	Accumulated depreciation	Net book value
at acquisition			20000
1	3960*1.8 = 7128	7128	12872
2	2970*1.8 = 5346	12474	7526
3	1980*1.8 = 3564	16038	3962
4	1782	17820	2180

c) Double decline

Year	Depreciation expense	Accumulated depreciation	Net book value
at acquisition			20000
1	10000	10000	10000
2	5000	15000	5000
3	2500	17500	2500
4	320	17820	2180