Question

# Sketches Inc. purchased a machine on January 1, 2016. The cost of the machine was \$41,000....

Sketches Inc. purchased a machine on January 1, 2016. The cost of the machine was \$41,000. Its estimated residual value was \$13,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 1,500 units in 2016 and 1,950 units in 2017.

Required: a. Calculate depreciation expense for 2016 and 2017 using the straight-line method.

b. Calculate the depreciation expense for 2016 and 2017 using the units-of-production method. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar.)

c. Calculate depreciation expense for 2016 through 2020 using the double-declining balance method. (Round your final answer to nearest dollar value.)

A.

Depreciation under Straight-line method = (Cost - Residual value) / Estimated useful life

= (\$41,000 - \$13,000) / 5

= \$5,600

Depreciation for 2016 = \$5,600

Depreciation for 2017 = \$5,600

B.

Depreciation cost per unit = (Cost - Residual value) / Expected units

= (\$41,000 - \$13,000) / 20,000

= \$1.4

Depreciation for 2016 = 1,500 units * \$1.4 = \$2,100

Depreciation for 2017 = 1,950 units * \$1.4 = \$2,730

C.

Depreciation under Double declining balance method = (Cost - Accumulated depreciation) / Useful life * 2

Depreciation for 2016 = (\$41,000 - \$0) / 5 * 2 = \$16,400

Depreciation for 2017 = (\$41,000 - \$16,400) / 5 * 2 = \$9,840

Depreciation for 2018 = \$1,760 (\$41,000 - \$13,000 - \$16,400 - \$9,840)

Depreciation for 2019 = \$0

Depreciation for 2020 = \$0

* Depreciation under Double declining balance is limited to residual value. So, depreciation in 2018 = \$1,760

#### Earn Coins

Coins can be redeemed for fabulous gifts.