Chapter 10 Plant Assets, u salvage value is i nethods in Luther Company\'s facto

Question

Chapter 10 Plant Assets, u salvage value is i nethods in Luther Company's factory on January 1. The factory manager estimates the machine wil ntalled by the year must not -2A A machine costing $257,500 with a four-year life and an estimated $20,000 ne will 475,000 units of product during its life. It actually produces the following units: 220,000 m roduce 124,600 in 2nd year, 121,800 in 3rd year, 15,200 in 4th year. The total number of units produced in Ist end of year 4 exceeds the original estimate this difference was not predicted. (The machi be depreciated below its estimated salvage value.) Required Prepare a table with the following column headings and compute depreciation for each depreciation of all years combined) for the machine under each depreciation method. of- Year Straight-Line Units-of-Production Double-Declining-Balance

Explanation / Answer

Prepare table :

Straight line dep = (257500-20000)/4=59375

Unit of production dep per unit = (257500-20000/475000)= 0.50 per unit

straight line rat e= 100/4=25%

double decline rate = 25*2=50%

Straight line Unit of production Double declining balance 1 59375 110000 128750 2 59375 62300 64375 3 59375 60900 32188 4 59375 4300 12187 Total 237500 237500 237500

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