Question

Shining Cookie Company, Inc., in Murfreesboro, TN bought a new ice cream maker at the beginning of the year at a cost of $32,000. The estimated useful life was four years, and the residual value was $3,400. Assume that the estimated productive life of the machine was 11,000 hours. Actual annual usage was 4,400 hours in year 1; 3,300 hours in year 2; 2,200 hours in year 3; and 1,100 hours in year 4.

Required:

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

a. Straight-line.

Year Depreciation Expense Accumulated Depreciation Net Book Value

At acquisation

1

2

3

4

b. Units-of-production (use four decimal places for the per unit output factor).

Year Depreciation Expense Accumulated Depreciation Net Book Value

At acquisation

1

2

3

4

c. Double-declining-balance.

Year Depreciation Expense Accumulated Depreciation Net Book Value

At acquisation

1

2

3

4

Answer 1

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

a. Straight-line.

Year	Depreciation expense	Accumlated depreciation	Net book value
At acquisation			32000
1	(32000-3400/4) = 7150	7150	24850
2	7150	14300	17700
3	7150	21450	10550
4	7150	28600	3400

Unit of production

Dep per unit = (32000-3400/11000) = 2.6 per unit

Year	Depreciation expense	accumlated depreciation	Net book value
At acquistion			32000
1	4400*2.6= 11440	11440	20560
2	3300*2.6 = 8580	20020	11980
3	2200*2.6 = 5720	25740	6260
4	1100*2.6 = 2860	28600	3400

c) double declining balance

Year	Depreciation expense	accumlated depreciation	net book value
At acquisition			32000
1	16000	16000	16000
2	8000	24000	8000
3	4000	28000	4000
5	600	28600	3400