Question

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-8 Help Save & Exit Submit Check my work A machine costing $211,800 with a four-year life and an estimated $17.000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 487,000 units of product during its life. It actually produces the following units: 121,700 in Year 1.123.200 in Year 2, 120.800 in Year 3, 131,300 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate-this difference was not predicted. The machine cannot be depreciated below its estimated salvage value.) Required: 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.) Complete this question by entering your answers in the tabs below. Straight Line Units of Production Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Straight-line depreciation. Straight-Line Depreciation Year Depreciation Expense 2 Total Straight Line Units of Production >

Answer 1

straight line method
year	depreciation expense
1	48,700
2	48,700
3	48,700
4	48,700
total	1,94,800

Depreciation expense = cost – scrap value / useful life

= 211,800 – 17,000 / 4

= 48,700

units of production method
year	units	depreciation rate	depreciation expense
1	1,21,700	0.3919	47694.23
2	1,23,200	0.3919	48282.08
3	1,20,800	0.3919	47341.52
4	1,31,300	0.3919	51456.47
total			194774.3

Depreciation expense = cost – scrap value / unit produced

= 211,800 – 17,000 / 497,000

= 0.3919 per unit

DDB method
year	begging of period book value	depreciation rate	depreciation expense	accumulated depreciation	book value
1	2,11,800	50%	105900	105900	1,05,900
2	1,05,900	50%	52950	158850	52,950
3	52,950	50%	26475	185325	26,475
4	26,475	50%	13237.5	198562.5	13,238

Depreciation rate = 100/useful life x 2

= 100/4 x 2

=50%