Solar Innovations Corporation bought a machine at the beginning of the year at a
ID: 2460288 • Letter: S
Question
Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $37,000. The estimated useful life was five years and the residual value was $4,500. Assume that the estimated productive life of the machine is 20,000 units. Expected annual production for year 1, 4,600 units; year 2, 5,600 units; year 3, 4,600 units; year 4, 4,600 units; and year 5, 600 units. Required: 1. Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.) a. Straight-line. b. Units-of-production. c. Double-declining-balance.
Explanation / Answer
Answer: a)
Depreciation expense per year using straight line method = (original cost of the machine - residual value)/estimated life of the machine .
Answer: b)
Depreciation expense per year using units of production method = (original cost of the machine - residual value)* actual production in each year/ estimated total production.
Answer:c)
Depreciation expense per year using double declining balance method = 2*[6500/(37000-4500)] * book value at the begining of the year.
Year at acquisition Income statement depreciation expense Cost Balance sheet accumulated depreciation Book value 0 $ 37,000.00 1 $ 6,500.00 $ 37,000.00 $ 6,500.00 $ 30,500.00 2 $ 6,500.00 $ 37,000.00 $ 13,000.00 $ 24,000.00 3 $ 6,500.00 $ 37,000.00 $ 19,500.00 $ 17,500.00 4 $ 6,500.00 $ 37,000.00 $ 26,000.00 $ 11,000.00 5 $ 6,500.00 $ 37,000.00 $ 32,500.00 $ 4,500.00Related Questions
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