(12 points) A new machine costing $1,800,000 cash and estimated to have a $60,00

Question

(12 points) A new machine costing $1,800,000 cash and estimated to have a $60,000 salvage chased on January 1. The machine is expected to produce 600,000 units of product during its . Calculate the depreciation expense in the first year under the following independent situation The company uses the units of production method and the machine produces 70,000 units of pl first year. The company uses the double declining balance method. The company uses the straight-line method. 0 - boob Bao cao 29 X 70000 = 203 coo De Spor Vs ..125 las x 2 = 25 1000 am - 30 000 - 22425 00 ats) A company sold a machine that originally cost $90,000 for $28,000 on this machine was $47,000 at the time of the sale. What was the com

Explanation / Answer

Calculate first year dep :

a) Unit of production dep = (1800000-60000/600000)*70000 = 203000

Straight line rate = 100/8 = 12.5%; double decline rate = 12.5*2 = 25%

b) Double decline balance dep = 1800000*25% = 450000

c) Straight line dep = (1800000-60000)/8 = 217500

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