A machine costing $209,000 with a four-year life and an estimated $17,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 480,000 units of product during its life. It actually produces the following units: 122,900 in Year 1, 123,300 in Year 2, 119,900 in Year 3, 123,900 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted. Note: The machine cannot 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.) Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation. Straight-Line Depreciation Year Depreciation Expense Year 1 Year 2 Year 3 Year 4 Total $0 Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production. Units of Production Year Units Depreciable Units Depreciation per unit Depreciation Expense Year 1 122,900 Year 2 123,300 Year 3 119,900 Year 4 123,900 Total $0 Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double-declining-balance. DDB Depreciation for the Period End of Period Year Beginning of Period Book Value Depreciation Rate Depreciation Expense Accumulated Depreciation Book Value Year 1 % $0 Year 2 % 0 Year 3 % 0 Year 4 % 0 Total

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A machine costing $209,000 with a four-year life and an estimated $17,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 480,000 units of product during its life. It actually produces the following units: 122,900 in Year 1, 123,300 in Year 2, 119,900 in Year 3, 123,900 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted. Note: The machine cannot 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.)

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.

Straight-Line Depreciation
Year	Depreciation Expense
Year 1
Year 2
Year 3
Year 4
Total	$0

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production.

Units of Production
Year	Units	Depreciable Units	Depreciation per unit	Depreciation Expense
Year 1	122,900
Year 2	123,300
Year 3	119,900
Year 4	123,900
Total				$0

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double-declining-balance.

	DDB Depreciation for the Period	End of Period
Year	Beginning of Period Book Value	Depreciation Rate	Depreciation Expense	Accumulated Depreciation	Book Value
Year 1			%			$0
Year 2			%			0
Year 3			%			0
Year 4			%			0
Total				$0

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