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 $22,000. The estimated useful life was four years, and the residual value was $2,000. Assume that the estimated productive life of the machine was 10,000 hours. Actual annual usage was 4,000 hours in Yea 1,3,000 hours in Year 2:2,000 hours in Year 3 and 1000 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. Reg 1A Reg 18 Reg 1C Complete a depreciation schedule using the units-of-production method. (Use two decimal places for the per unit output factor. Do not round Intermediate calculations.) Year Depreciation Expense Accumulated Depreciation Net Book Value 22 000 At acquisition

Answer 1

1B)

Units of production method :

Depreciation cost per hour =[cost-residual value]/useful life in hours

                         = [22000 - 2000]/10000

                          = 20000/10000

                          = $ 2 per hour

Year	Depreciation expense	Accumulated depreciation	Net book value
At acquistion			22000
1	4000*2=8000	8000	22000-8000=14000
2	3000*2 =6000	8000+6000=14000	14000-6000=8000
3	2000*2=4000	14000+4000=18000	8000-4000=4000
4	1000*2=2000	18000+2000=20000	4000-2000=2000
Total	20000