A machine costing $210,600 with a four-year life and an estimated $19,000 salvag

Question

A machine costing $210,600 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 479,000 units of product during its life. It actually produces the following units: 122,400 in 1st year, 123,100 in 2nd year, 120.200 in 3rd year, 123,300 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.)

Explanation / Answer

(210600-19000)/4 47900 year Dep 1 47,900 2 47,900 3 47,900 4 47,900 units of producction (210600-19000)/479000 0.4 Depreciation year unit per unit expense 1 122,400 0.4 48960 2 123,100 0.4 49240 3 120,200 0.4 48080 4 113,300 0.4 45320 479,000 191600 beginning rate dep Accumul book year BV exp dep value 1 210,600 50% 105300 105,300 105,300 2 105,300 50% 52650 157,950 52,650 3 52,650 50% 26325 184,275 26,325 4 26,325 28% 7,325 191,600 19,000

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