Question

A machine costing $213,200 with a four-year life and an estimated $16,000 salvage value is Installed In Luther Company's factory on January 1. The factory manager estimates the machine will produce 493,000 units of product during its life. It actually produces the following units: 122,000 In Year 1, 124,300 In Year 2, 121,100 In Year 3, 135,600 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. Straight Line Units of Production DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation. Straight-Line Depreciation Year Depreciation Expense Total

Answer 1

Cost of the Machine Less Salvage Value Depreciable Value of the Machine Life of the Machine Life of the Machine ( Units) 213200 16000 197200 4 493000 Straight Line Method Annual Depreciation : Depreciable Value / Life annual Depreciation : (197200/4)) 49300 Straight Line Method Depreciation Expenses Year 49300 2 49300 49300 4 49300 Total 197200

Units of Activity Method Annual Depreciation : Depreciable Value / Life Depreciation Per unit :197200/493000 0.4000 Units of Activity Method Depreciation Depreciation Depreciable Year Units Per Unit Expeneses 0.40 122000 48800 49720 2 124300 0.40 0.40 121100 48440 50240 4 125600 0.40 Total 197200

Double Decline Balance Method End of the Period DDB Depreciation for the Period Depreciation Depreciation Expeneses Beginning Book value Accumulated Вook Depreciaion 106600 Value Year Rate 50% 213200 106600 106600 50% 53300 159900 53300 2 106600 53300 50% 26650 186550 26650 3 26650 50% 10650 4 197200 16000 Totals 197200