esre that the machine would be recycled at the end of its useful life. The cost
ID: 2556935 • Letter: E
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esre that the machine would be recycled at the end of its useful life. The cost of the recycling will be gnificant. Would this have an impact on the answer to part (a) above? Explain. P9-4 the of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line t Valmont Limited purchased equipment on March 27,2018, at a cost of $244,000. Management which it currently uses for other equipment. The new equipment has an estimated residual value of estimated useful life of either four vears or 80,000 units. Demand for the products produced by the so the $4,000 and an differen t is sporadic (LO 2) equipment will be used more in some years than in others. Assume the equipment produces l units each year: 14,800 units in 2018;, 20,400 units in 2019;, 19,800 units in 2020; 20,000 units in 2021 2022. Valmont has a December 31 year end. the following number 800 units in 2020; 20,000 units in 2021; and 5,000 units structions repare separate depreciation schedules for the life of the equipment using (1) the straight-line double-diminishing-balance method, and (3) the units-of-production method. (2) theExplanation / Answer
1-Straight line mthod of depriciation-
In straight line method of depriciation we subtract the residual value from the cost of the machine.And the value thus obtained is divided by the number of years of useful life of the machine.Hence we get the deprication value for each year till the assets useful life.
Assets value=244000
Residual value=4000
Life of machine=4 years
Therefore as discussed above the depriciation amount for each year will be-
=244000-4000/4
=60000 each year till the 4th year after which the machine will be amortised fully..
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