Solar Innovations Corporation bought a machine at the beginning of the year at a

Question

Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $38,000. The estimated useful life was five years and the residual value was $4,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was 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 Year Cost Depreciation Book Value At acquisition 2 4

Explanation / Answer

a) Straight line :

:b) Unit of production

4000

c) Double decline

Income statement Balance sheet Year Depreciation expense Cost Accumlated depreciation Book value At acquisition 38000 1 6800 38000 6800 31200 2 6800 38000 13600 24400 3 6800 38000 20400 17600 4 6800 38000 27200 10800 5 6800 38000 34000 4000

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