Schrade Company bought a machine for $124,000 cash. The estimated useful life wa
ID: 2566955 • Letter: S
Question
Schrade Company bought a machine for $124,000 cash. The estimated useful life was four years, and the estimated residual value was $6,960. Assume that the estimated useful life in productive units is 133,000. Units actually produced were 56,000 in year 1 and 58,000 in year 2.
Schrade Company bought a machine for $124,000 cash. The estimated useful life was four years, and the estimated residual value was $6,960. Assume that the estimated useful life in productive units is 133,000. Units actually produced were 56,000 in year 1 and 58,000 in year 2.
Required: 1. Determine the appropriate amounts to complete the following schedule. (Round your answers to the nearest dollar amount. Do not round intermediate calculations.) Depreciation Expense for Net Book Value at the End of Year 2 Year 2 Method of Depreciation Straight-line Units-of-production Double-declining-balance Year 1 Year 1Explanation / Answer
Straight line: Depreciation expense: Year 1 29260 =(124000-6960)/4 Year 2 29260 Net book value: Year 1 94740 =124000-29260 Year 2 65480 =94740-29260 Units of production: Per unit depreciation=(124000-6960)/133000 = 0.88 Depreciation expense: Year 1 49280 =0.88*56000 Year 2 51040 =0.88*58000 Net book value: Year 1 74720 =124000-49280 Year 2 23680 =74720-51040 Double-declining balance: Depreciation rate = 1/4*2 = 50% Depreciation expense: Year 1 62000 =124000*50% Year 2 31000 =(124000-62000)*50% Net book value: Year 1 62000 =124000-62000 Year 2 31000 =62000-31000
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