Corporation bought a machine at the beginning of the year at

Corporation bought a machine at the beginning of the year at a cost of $36,000. The residual value was $3,500. Assume that the estimated esimated userd ife was five years productive lHe of the machine is 10,000 units 3,000 unts: year 3, 2,000 units: year 4, 2.000 unts; and year 5, 1,000 units Required ·Complete a depreciation schedide fr each of the alternative methods po not round intermediate Cost Balance Sheet Year Cost 964Apoumulated Book Value Statement Cost Book Type here to search

Solution

Cost of machine 35000 Less: Residual Value 3500 Depreciable amount 31500 Divide: Life 5 Annual depreciation 6300 Depreciation Scedhuel-SLM Year Dep expense Cost Accumulated Book Value Ddepreciation At acquisition 35000 1 6300 35000 6300 28700 2 6300 35000 12600 22400 3 6300 35000 18900 16100 4 6300 35000 25200 9800 5 6300 35000 31500 3500 Cost of machine 35000 Less: Residual Value 3500 Depreciable amount 31500 Divide: Life 10000 Depreciation per unint 3.15 Depreciation under various years: Year1 (2000*3.15) 6300 Year2 (3000*3.15) 9450 Year3 (2000*3.15) 6300 Year4 (2000*3.15) 6300 Year5 (1000*3.15) 3150 Depreciation Schedule-Units of production Year Dep expense Cost Accumulated Book Value Ddepreciation At Acquistion 35000 1 6300 35000 6300 28700 2 9450 35000 15750 19250 3 6300 35000 22050 12950 4 6300 35000 28350 6650 5 3150 35000 31500 3500 Rate of dep under SLM: 20% Rate of dep under DDB; 40% Depreciation Schedule-DDB Year Dep expense Cost Accumulated Book Value Ddepreciation At acquisition 35000 1 14000 35000 14000 21000 2 8400 35000 22400 12600 3 5040 35000 27440 7560 4 3024 35000 30464 4536 5 1036 35000 31500 3500 Req 2-a: Units of Production gives the highest income in Year2 Req 2-b: Yes