A machine costing $214,000 with a four-year lifte and an estimated $18,000 salva
ID: 2570536 • Letter: A
Question
A machine costing $214,000 with a four-year lifte and an estimated $18,000 salvage value is installed in Luther Company's factory on January t The factory manager estimates the machine will produce 490.000 units of product during its life. It following units 121.700 in 1st year. 123 200 in 2n the end of year 4 exceeds the original estimate -this difference was not predicted. (The machine must not be estimated salvage value.) d year. 120.400 in 3rd year. 134.700 in 4th year. The total number of units produced by depreciated below its Requ Compute depreciation for each year land total depreciation of all years combined) for the machine under each depreciation method Round you r per unit deprecletion to 2 declmal places. Round your answers to the nearest whole dollar.) Complete this question by entering your answers in the tabs below. Straight LineUnits of ProductionDDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation. Straight-line YearExplanation / Answer
Calculate dep. Exp. Using SLM
Purchase price of machine = $214000
Estimated useful life = 4 years
Estimated salvage value = $18000
Dep. =Purchase cost-salvage value
Useful life
= $214000-$18000
4
= 49000 per year
Dep. Is constant for every year i.e. $49000
Year
Depreciation exp.
1
$49000
2
$49000
3
$49000
4
$49000
Calculation of dep. Exp. Under units of production method.
Purchase price= $214000
Estimated useful life= 4 years
Estimated salvage value= $18000
Total estimated useful life in production hours = 485000 units
Depreciation per unit = Purchase cost – Salvage value
Total production units
= $214000-$18000
490000
= 0.40 per year
Dep. Exp. For each year:
Years
Units
Dep. Per unit
Total Dep.
1
121700
0.40
48680
2
123200
0.40
49280
3
120400
0.40
48160
4
134700
0.40
53880
Calculate dep. Exp. Schedule using double declining balance method:
Purchase price= $214000
Estimated useful life= 4 years
Estimated salvage value= $18000
Dep. Rate under DD method = 1 x100 x 2
Useful life
Year
Beginning depreciable Amount
Dep. Rate (%)
Depreciation
(C=A x B )
Accumulated Depreciation
Book value
1
214000
50%
107000
107000
107000
2
107000
50%
53500
160500
53500
3
53500
50%
26750
187250
26750
4
26750
32.71%
8750
196000
18000
Total
196000
Year
Depreciation exp.
1
$49000
2
$49000
3
$49000
4
$49000
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