Strong Metals Inc. purchased a new stamping machine at the beginning of the year
ID: 2771313 • Letter: S
Question
Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $580,000. The estimated residual value was $60,000. Assume that the estimated useful life was five years, and the estimated productive life of the machine was 260,000 units. Actual annual production was as follows:
Required:
Complete a separate depreciation schedule for each of the alternative methods.
a. Straight-line.
year depreciation expenses accumulated depreciation Net book value
b. unit of production
year depreciaation expenses accumulated depreciation Net book value
c. double-decling-balancing
year depreciaation expenses accumulated depreciation Net book value
Year Units 1 73,000 2 62,000 3 30,000 4 53,000 42,000Required:
1.Complete a separate depreciation schedule for each of the alternative methods.
a. Straight-line.
year depreciation expenses accumulated depreciation Net book value
b. unit of production
year depreciaation expenses accumulated depreciation Net book value
c. double-decling-balancing
year depreciaation expenses accumulated depreciation Net book value
Explanation / Answer
Cost of Machine 580,000.00 Salvage Value 60,000.00 Life in Years 5.00 Statement showing computation of SLM Particulars Year1 Year2 Year3 Year4 Year5 Opening balance 580,000.00 476,000.00 372,000.00 268,000.00 164,000.00 Depreciation(580,000-60,000)/5 104,000.00 104,000.00 104,000.00 104,000.00 104,000.00 Closing Balance 476,000.00 372,000.00 268,000.00 164,000.00 60,000.00 Cost of Machine 580,000.00 Salvage Value 60,000.00 Life in Units 260,000.00 Statement showing computation of units of production Particulars Year1 Year2 Year3 Year4 Year5 Opening balance 580,000.00 434,000.00 310,000.00 250,000.00 144,000.00 No of Units 73,000.00 62,000.00 30,000.00 53,000.00 42,000.00 Depreciation(580,000-60000)/260,000 * No of units 146,000.00 124,000.00 60,000.00 106,000.00 84,000.00 Closing Balance 434,000.00 310,000.00 250,000.00 144,000.00 60,000.00 Cost of Machine 580,000.00 Salvage Value 60,000.00 Life in Years 5.00 Depreciation Rate = 40% Statement showing computation of double declining Particulars Year1 Year2 Year3 Year4 Year5 Opening balance 580,000.00 348,000.00 208,800.00 125,280.00 75,168.00 Depreciation @40% 232,000.00 139,200.00 83,520.00 50,112.00 15,168.00 Closing Balance 348,000.00 208,800.00 125,280.00 75,168.00 60,000.00