Question

Problem 10-2A Depreciation methods A machine costing $257.500 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its life. It actually produces the following units: 220,000 in Year 1. 124,600 in Year 2, 121,800 in Year 3, and 15.200 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate this difference was not predicted. Note: The machine cannot be depreci- ated below its estimated salvage value. Required Prepare a table with the following column headings and compute depreciation for each year and total depreciation of all years combined) for the machine under cach depreciation method. Year Straight Line Units of Production Double-Declining-Balance Check Year una production depreciation $43000DB depreciation $123

skip double declining balance

Answer 1

C D $257,500 $20,000 A 1 Cost 2 Salvage value 3 Useful life (years) 4 Useful life (Units) Double declining 5 depreciation rate 475,000 50% Year 81 2 103 114 Total Straight-Line $59,375 $59.375 $59.375 $59.375 $237,500 Units-of-Production $110,000 $62,300 $60,900 $4,300 $237,500 Double-Declining- Balance $128.750 $64,375 $32.188 $12,187 $237,500 1 Cost 257500 2 Salvage value 20000 3 Useful life (years) 4 4 Useful life (Units) 475000 Double declining 5 depreciation rate =(1/B3)*2 Year 8 1 92 10 3 11 4 12 Straight-Line Units-of-Production Double-Declining-Balance =(SBS1-SBS2) $B$3 =((SBS1-SBS2) SBS4)*220000 =B1*B5 =($B$1-SBS2)$B$3 =((SBS1-SBS2)/SBS4)*124600 (B1-D8)*B5 =(SBS1-SBS2) $B$3 =((SBS1-SBS2) SB$4)*121800 =(B1-DS-D9)*B5 =(SBS1-SBS2) SBS3 =B1-B2-C8-C9-C10 =ROUNDDOWN(B1-B2-D8-D9-D10,0) ESUM(B8B11) =SUM(C8C11) =SUM(D8D11) Total