Sketches Inc. purchased a machine on January 1, 2016. The cost of the machine wa

Question

Sketches Inc. purchased a machine on January 1, 2016. The cost of the machine was $32,000. Its estimated residual value was $10,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 1,200 units in 2016 and 1,650 units in 2017.

Required:

a.

b. Calculate the depreciation expense for 2016 and 2017 using the units-of-production method. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar.)

c. Calculate depreciation expense for 2016 through 2020 using the double-declining balance method. (Round your final answer to nearest dollar value.)

Explanation / Answer

Calculation of the Depreciation Expenses Depreciation (Cost- Residual Value)/Life (32000-10000)/5 4400 Depreciation Expense 2016 4400 2017 4400 Units of Production 2016 22000*1200/20000 $1,320 2017 22000*1650/20000 $1,815

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