Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wel

Question

Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $15,500. The estimated useful life was five years and the residual value was $1,500. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual production was year 1, 2,350 hours; year 2, 2,500 hours; year 3, 2,050 hours; year 4, 2,100 hours; and year 5, 1,000 hours.

Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

a. Straight Line

b. Units-of-production.

Double-declining-balance.

Explanation / Answer

Depreciation 15500-1500/5 2800 Depreciation Schedule 1 Straight Line Method Year Value Depreciation 1 15500 2800 12700 2 2800 9900 3 2800 7100 4 2800 4300 5 2800 1500 14000/10000 b Units of production Value Year Units 1 2350 3290 12210 (15500-12210) 2 2500 3500 8710 3 2050 2870 5840 4 2100 2940 2900 5 1000 1400 1500 10000

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