8 ? O ? ezto.mheducation.comhm.tpx Solar Innovations Corporation bought a machin

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8 ? O ? ezto.mheducation.comhm.tpx Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $24,000. The estimated useful life was five years and the residual value was $3,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production for year 1, 2,000 units, year 2 3,000 units; year 3, 2,000 units, year 4, 2,000 units; and year 5, 1,000 units Required: 1. Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.) a. Straight-line. Income Statement Depreciation Expense Balance Sheet Accumulated Book Value YearDe Cost at At acquisition 5 b. Units-of-production Income Statement Depreciation Balance Sheet Cost Accumulated Book Value Year At acquisition O Type here to search

Explanation / Answer

2.a. Straight Line Method will result higher income in Year-2 Because depreciation cost is lower as compare to depreciation calculated as per other method.

2.b. No.

a) Straight line method = (cost - salvage value)/Life(yrs) Year Cost
(a) Depreciable Value Depreciation Accumulated Depreciation
(b) Book Value
(a-b) Calculation 1 $24,000 $21,000 $4,200 $4,200 $19,800 ($21000/5) 2 $24,000 $21,000 $4,200 $8,400 $15,600 ($21000/5) 3 $24,000 $21,000 $4,200 $12,600 $11,400 ($21000/5) 4 $24,000 $21,000 $4,200 $16,800 $7,200 ($21000/5) 4 $24,000 $21,000 $4,200 $21,000 $3,000 ($21000/5)

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