Question

A machine costing $213,200 with a four-year life and an estimated $18,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 488,000 units of product during its life. It actually produces the following units: 122,100 in 1st year, 122,800 in 2nd year, 120,200 in 3rd year, 132,900 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not 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.)

Answer 1

Computation depreciation using straig line method Depreciation a cost of asset - Salvage value Oseful life $ 213200 - $18000 . 4 years € $ 28800 - Gear Straight ane depreciation Deprecation expenbe $48800 $ 48 800 $ 48800 $ 48800 $ 195.200 Total

Depreciation using consits production method Depreciation unit = cost of asset-Salvage value - Number of units of production $213200 - $ 18000 488000 units $0.4 unit Crity of production year bepreciable depreciation Depreciation per obit l expense 122100 $0.4 $48840 2 122800 $0.4 49120 3 20200 $0.4 i 480gol 4 11229001:2004 Too 49160 Total $195200

Depreciation using doble declining method Depreciation rate = x 2 x 100 useful life 3.1 X2 X 100 2507 DOB depreciation for the period End of I period year Beginning Depreciation Depreciation Accome Book period rate Expense -lated value Book value depreciation $213200 50 $ 106600 $106600 $ 106600 2 A 106600 50 % 53300 8 159900 39 53300 50 To $266581 $186530 $26658 4 $26650 32.461 $8650 $ 195200 $ 18000 $ 53300