Calculating depreciation expense using three different methods Banko Inc. manufa

Question

Calculating depreciation expense using three different methods Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2018:

Purchase Price         $70,000
Delivery Cost         $3000
Installation charge    $1000
Estimated life         5 years
Estimated units        140,000
Salvage Estimate    $4000

During 2018, the machine produced 36,000 units and during 2019, it produced 38,000 units.

Required:
Determine the amount of depreciation expense for 2018 and 2019 using each of the following methods:
a. Straight-line.
b. Double-declining-balance.
c. Units of production.

Please format answers similar to below examples

a. Straight-Line Show how you calculate the amount: 2018 $ 2019 $ Double-Declining-Balance Show how you calculate the amount b. c. Units-of-Production Show how you calculate the amount

Explanation / Answer

Cost = (70000+3000+1000) = 74000

a) Straight line dep = (74000-4000)/5 = 14000

2018 dep = 14000

2019 dep = 14000

b) Double decline :

Double decline rate = 100/5*2 = 40%

2018 dep = 74000*40% = 29600

2019 dep = 74000*60%*40% = 17760

c) Unit of production :

2018 dep = (74000-4000/140000)*36000 = 18000

2019 dep = (74000-4000/140000)*38000 = 19000

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