Question

# For your analysis, you have been asked to compare methods based on a machine that cost...

For your analysis, you have been asked to compare methods based on a machine that cost \$176,000. The estimated useful life is 10 years, and the estimated residual value is \$33,440. The machine has an estimated useful life in productive output of 216,000 units. Actual output was 28,000 in year 1 and 24,000 in year 2. Required: 1. For years 1 and 2 only, prepare separate depreciation schedules assuming: (Do not round intermediate calculations and round your final answers to the nearest dollar amount.) a. Straight-line method; b). units of production method; and c) double declining method Please use exact numbers

SOLUTION:- CALCULATION OF DEPRECIATION:-

 METHOD YEAR1 YEAR 2 STRAIGHT LINE METHOD COST- SCRAP VALUE/ USEFUL LIFE OF ASSET 176000-33440/10=14256 176000-33440-14256/9=14256 UNITS OF PRODUCTION METHOD (COST -SCRAPVALUE/TOTAL NO OF UNITS)* ACTUAL NO OF UNITS (176000-33440/216000)*28000=18480 (176000-33440/216000)*24000=15840 double declining method rate of depreciation=(1/useful life)*200% (1/5)*200% =40% 176000*40%=70400 balance=105600 105600*40%=42240 balance=63360

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