Question

Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $26,000. The estimated useful life was five years and the residual value was $3,000. Assume that the estimated productive life of the machine is 20,000 units. Expected annual production for year 1, 4,500 units; year 2, 5,500 units; year 3, 4,500 units; year 4, 4,500 units; and year 5, 1,000 units.

1.

Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.)

c.	Double-declining-balance.

b.

Units-of-production.

a.	Straight-line

Answer 1

Complete a depreciation schedule for each of the alternative methods.

a) Straight line = (26000-3000/5) = 4600 per year

Year	Depreciation expense
1	4600
2	4600
3	4600
4	4600
5	4600

b) Unit of production method = (26000-3000/20000) = 1.15 per unit

Year	Depreciation expense
1	5175
2	6325
3	5175
4	5175
5	1150

c) Double decline balance = 100/5 = 20%*2 = 40%

Year	Depreciation expense
1	10400
2	6240
3	3744
4	2246
5	370