A machine costing $257,500 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 475,000 units of product during its life. It actually produces the following units: 220,000 in Year 1, 124,600 in Year 2, 121,800 in Year 3, and 15,200 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate-this difference was not predicted. (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.) Complete this question by entering your answers in the tabs below. Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.
A machine costing $257,500 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 475,000 units of product during its life. It actually produces the following units: 220,000 in Year 1, 124,600 in Year 2, 121,800 in Year 3, and 15,200 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate-this difference was not predicted. (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.) Complete this question by entering your answers in the tabs below. Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A machine costing $257,500 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 475,000 units of product during its life. It actually produces the
following units: 220,000 in Year 1, 124,600 in Year 2, 121,800 in Year 3, and 15,200 in Year 4. The total number of units produced by the
end of Year 4 exceeds the original estimate-this difference was not predicted. (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.)
Complete this question by entering your answers in the tabs below.
Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation.
1
Straight-
Line
Depreciation
2
Year
3
1
4
2
3
Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production.
4
Total
Units of
Production
Year
1
2
3
Year
4
Total
Depreciation
Expense
Total
Units
Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double-declining-balance.
220,000
124,600
121,800
15,200
DDB
Depreciation
for the Period
Depreciable Depreciation Depreciation
Units
per unit
Expense
Beginning of
Period Book
Value
End of
Period
Depreciation
Rate
Depreciation Accumulated Book
Expense
Depreciation Value
%
%
%
%
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