Question

On June 1, a machine costing $660,000 with a 5-year life and an estimated $50,000 salvage value was purchased. It was also estimated that the machine would produce 200,000 units during its life. Actual production would be 40,000 units per year for all five years.

Using the depreciation template provided, determine the amount of depreciation expense for the third year under each of the following assumption

The company uses the double-declining-balance method of depreciation.

50 Cast Salvage value Depreciable cost Useful life Useful life in mles 50 Units of Production Straight Line Rate 1008 Salvage Value ful life in Straight line eciation rate - Double-declining-balance rate 2 x Straight-line rate alance rate Depreciation expense Double-Declining- balance rate x Beginning-period book value Beginning of Book Value 50 Annual period Value Rate Expense Depreciation Year 1 ear Year 4 ear Cost

Answer 1

Solution:

Hence depreciation for 3rd year = $95,040