Question

A machine costing $215,000 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 490,000 units of product during its life. It actually produces the following units: 121,500 in 1st year, 122,900 in 2nd year, 120,900 in 3rd year, 134,700 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.

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 each Straight-line depreciation.

Straight-Line Depreciation
Year	Depreciation Expense
1	$49,000
2	49,000
3	49,000
4	49,000
Total	$196,000

Units of Production

Year

Depreciable Units

Depreciation per unit

Depreciation Expense

1

2

3

4

Total

$0

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each 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
1			%			$0
2			%			0
3			%			0
4			%			0
				$0

Answer 1

Unit of production dep :

Depreciation per unit = ( 215000-19000)/490000 = 0.40 per unit

Units of Production
Year	Depreciable Units	Depreciation per unit	Depreciation Expense
1	121500	0.40	48600
2	122900	0.40	49160
3	120900	0.40	48360
4			49880
Total			196000

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

Year	beginning of period book value	dep rate	depreciation expenses	accumlated dep	Book value
1	215000	50%	107500	107500	107500
2	107500	50%	53750	161250	53750
3	53750	50%	26875	188125	26875
4	26875		7875	196000	19000
Total			196000