Ch Problem 82A Depreciation methods LO P1 A machine costing

Ch Problem 8-2A Depreciation methods LO P1 A machine costing $210,200 with a four-year life and an estimated $17,000 salvage value is installed in Luther Company\'s factory on January 1. The factory manager estimates the machine will produce 483,000 units of product during its life. It actually produces the following units: 122,300 in 1st year, 122,800 in 2nd year, 120,900 in 3rd year, 127,000 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate-this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.) 15 points Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method (Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.) Complete this question by entering your answers in the tabs below Straight LineProduction DDB Compute depreclation for each year (and total depreciation of all years combined) for the machine under each Straight-line Year Depreciation Expense Total Units of Production> Prev 1 of 1 Next >

Solution

Required 1 straight line depreciation

Annual depreciation = (cost - salvage value) / estimated life

=(210200-17000)/4 = 48300

Required 2 units of production method

Depreciation per unit = (cost - salvage value) / units of product produced = (210200-17000) /483000 = 0.40 per unit

Required 3 DDB

DDD rate = 1 / estimated life * 2 = 1 / 4 *2 = 50%

105100

(210200-105100)

157650

(105100+52550)

52550

(210200-157650)

183925

(157650+26275)

26275

(210200-183925)

9275

(26275-17000)

193200

(183925+9275)

Year	depreciation expense
1	48300
2	48300
3	48300
4	48300
Total	193200