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?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:### Computing Depreciation under Alternative Methods
**Scenario:**
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:
#### Annual Production Table
| Year | Units |
|------|--------|
| 1 | 70,000 |
| 2 | 67,000 |
| 3 | 50,000 |
| 4 | 73,000 |
| 5 | 40,000 |
#### Tasks:
1. **Complete a separate depreciation schedule for each of the alternative methods:**
- **a. Straight-line.**
- **b. Units-of-production (use two decimal places for the per-unit output factor).**
- **c. Double-declining-balance.**
A sample schedule is shown below. Round your answers to the nearest dollar.
#### Sample Depreciation Schedule:
| Method: ___________ |
|---------------------|
| Year | Computation | Depreciation Expense | Accumulated Depreciation | Net Book Value |
|-------------------|------------------------|----------------------|--------------------------|---------------------|
| At acquisition | | | | |
| 1 | | | | |
| 2 | | | | |
| etc. | | | | |
2. **Discussion Prompt:**
Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might management consider in selecting a preferable depreciation method in conformity with the expense recognition (matching) principle?
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