For your analysis you have been asked to compare methods bas

For your analysis, you have been asked to compare methods based on a machine that cost $176,000. The estimated useful life is 10 years, and the estimated residual value is $33,440. The machine has an estimated useful life in productive output of 216,000 units. Actual output was 28,000 in year 1 and 24,000 in year 2. Required: 1. For years 1 and 2 only, prepare separate depreciation schedules assuming: (Do not round intermediate calculations and round your final answers to the nearest dollar amount.) a. Straight-line method; b). units of production method; and c) double declining method Please use exact numbers

Solution

SOLUTION:- CALCULATION OF DEPRECIATION:-

STRAIGHT LINE METHOD

COST- SCRAP VALUE/ USEFUL LIFE OF ASSET

UNITS OF PRODUCTION METHOD

(COST -SCRAPVALUE/TOTAL NO OF UNITS)* ACTUAL NO OF UNITS

double declining method

rate of depreciation=(1/useful life)*200%

(1/5)*200%

=40%

176000*40%=70400

balance=105600

105600*40%=42240

balance=63360