A machine costing $212,200 with a four-year life and an estimated $17,000 salvag

Question

A machine costing $212,200 with a four-year life and an estimated $17,000 salvage value is installed in Calhoon Company’s factory on January 1. The factory manager estimates the machine will produce 488,000 units of product during its life. It actually produces the following units: year 1, 122,500; year 2, 122,900; year 3, 120,600; and year 4, 128,400. 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.)

Year Straight-Line Units of
Production Double declining balance 1 $ $ $ 2 3 4 Totals $ $ $

Explanation / Answer

Year Straight-Line Units of Production Double declining balance 1 $48,800 $49,000 $160,100 2 $48,800 $49,160 $53,050 3 $48,800 $48,240 $26,525 4 $48,800 $48,800 $9,525 Totals $195,200 $195,200 $195,200

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