Question

Problem 8-2A Depreciation methods LO P1 A machine costing $213.000 with a four-year life and an estimated $15,000 savage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 495.000 units of product during its life. It actually produces the following units: 122,500 in Year 1 124,300 in Year 2, 120.700 in Year 3, 137,500 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. Units of Production DOO Compute depreciation for each year (and total depreciation of all yurs combined) for the machine under the stralata-line depreciation Straight Line Depreciation Depreciation Expense Year

Answer 1

Cost of the Machine Less : Salvage Value Depreciable Value of the Machine Life of the Machine Life of the Machine (Units) 213000 15000 198000 4 495000 Straight Line Method Annual Depreciation : Depreciable Value / Life annual Depreciation : (198000/4)) Straight Line Method 49500 Depreciation Year Expenses 1 49500 49500 2 49500 3 49500 4 Total 198000

Units of Activity Method Annual Depreciation : Depreciable Value Life Depreciation Per unit :198000/495000 0.4000 Units of Activity Method Depreciation Depreciation Depreciable Year Units Per Unit Expeneses 122500 0.40 1 49000 124300 2 0.40 49720 33 120700 0.40 48280 127500 51000 4 0.40 Total 198000 Double Decline Balance Method DDB Depreciation for the Period End of the Period Depreciation DepreciationAccumulated Expeneses Beginning Book Вook Year value Value Rate Depreciaion 213000 50% 106500 106500 1 106500 2. 106500 50% 53250 159750 53250 53250 50% 26625 186375 26625 33 50% 11625 15000 26625 198000 Totals 198000