Please help me understand why the 4th year is not correct? Thank you! A machine
ID: 2550583 • Letter: P
Question
Please help me understand why the 4th year is not correct? Thank you!
A machine costing $216,400 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 491,000 units of product during its life. It actually produces the following units: 122,800 in 1st year, 122,700 in 2nd year, 119,700 in 3rd year, 135,800 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.) Required Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method (Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Units of ht Line Production Straig DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Units of production Units of Production Depreclable Units Year per unit Expense 122,800S 122,700S 119,700S 135,800 x S 501,000 0.40 0.40 0.40 49,120 49,080 47,880 54,320 200,400 4 Total Straight Line DDB >Explanation / Answer
Since the units produced exceed the original estimate we need to take units upto the extent that depreciation expense does not exceed salvage value that is 216,400-20000= 196400 (total dep to be charged) hence units to be depreciated in last year will be (491,000 - (122800+122700+119700) 125800 Depreciable dep Depreciation year units per unit expense 4 125,800 0.4 50320