Cha pter 10 Plant Assets, Natural Resources, and Intangibles ng $257,500 with a

Question

Cha pter 10 Plant Assets, Natural Resources, and Intangibles ng $257,500 with a four-year life and an estimated $20,000 salvage value is y's factory on January 1. The factory manager estimates the machine wi insta produce A machine costi 75,000 units of product during its life. It actually produces the following units: 220.000 in It 124.600 in 2nd year, 121.800 in 3rd year, 15,200 in 4th year. The total number of units produced bea ds end of year 4 exceeds the original estimate-this difference was not predicted. (lhe machine must depreciated below its estimated salvage value.) Required Prepare a table with the following column headings and compute depreciation for each year be total depreciation of all years combined) for the machine under each depreciation method. Units-of-Production Double-Declining-Balance Year Straight-Line

Explanation / Answer

Prepare depreciation Schedule :

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

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

Straight line rate = 100/4=25%

double decline rate = 25*2=50%

Year Straight line Unit of production Double decline 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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