Computing Depreciation under Alternative Methods Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 page 446 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. A sample schedule is shown below. Round your answers to the nearest dollar. a. Straight-line. b. Units-of-production (use two decimal places for the per unit output factor). c. Double-declining-balance. Method: Depreciation Expense Accumulated Depreciation Year Computation Net Book Value At acquisition 1 2 etc. 2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might managemen consider in selecting a preferable depreciation method in conformity with the expense recognition (matching) principle?

Computing Depreciation under Alternative Methods Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 page 446 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. A sample schedule is shown below. Round your answers to the nearest dollar. a. Straight-line. b. Units-of-production (use two decimal places for the per unit output factor). c. Double-declining-balance. Method: Depreciation Expense Accumulated Depreciation Year Computation Net Book Value At acquisition 1 2 etc. 2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might managemen consider in selecting a preferable depreciation method in conformity with the expense recognition (matching) principle?

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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