A machine costing $209,600 with a four-year life and an estimated $18,000 salvag

Question

A machine costing $209,600 with a four-year life and an estimated $18,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 479.000 units of product during its life. It actually produces the following units: 122.700 in 1st year. 123.100 in 2nd year. 120.700 in 3rd year. 122.500 in 4th year. 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.) 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.)

Explanation / Answer

Year Units of Production Depriciation per unit Depriciation Expense 3 $              120,700.00 40% $48,280 4 $              122,500.00 37% $45,000 Year Net book value Depriciation Rate Double-declining balance depreciation computed as 2 × SL rate × beginning NBV Accumulated Depriciation Net book value end of year 1 $209,600 50% $104,800 $104,800 $104,800 2 $104,800 50% $52,400 $157,200 $52,400 3 $52,400 50% $26,200 $183,400 $26,200 4 $26,200 31.30% $8,201 $191,601 $18,000

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