Sneetch Inc. purchased a star-making machine on January 1, 2014. The cost of the

Question

Sneetch Inc. purchased a star-making machine on January 1, 2014. The cost of the machine was $20,000 ts estimated residual value was $3.000 at the end of an estimated 10-year life. The company expects to produce a total of 20,000 units. a. Caloulate depreciation expense for 2014 and 2015 using the straight-line method 2014 2015 Expense b. Calculate depreciation expense for 2014 and 2015 using the double-declining balance method. 2014 2015 c. Calculate the depreciation expense for 2014 and 2015 using the unts-of-production method. Tha company produced 80o unts in 2014 and 1.250 unilts in 2015. iRound your final answer to nearest dollar value.) O Type here to search Esc

Explanation / Answer

a) Straight line depreciation (20,000-3000)/10 1700 2014 2015 Depreciation expense 1,700 1,700 b) Double declining method rate = 1/10*2 0.2 or 20% 2014 depreciation = 20,000*20%= 4000 2015 depreciation = (20000-4000)*20%= 3200 2014 2015 Depreciation expense 4,000 3,200 c) units of production method depreciation rate = (20,000 - 3,000)/20000 0.85 2014 depreciation = .85*800= 680 2015 depreciation = .85*1,250= 1062.5 2014 2015 Depreciation expense 680 1,063

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