Share
Explore BrainMass

Compute depreciation using three methods for a $320,000 mach

A machine costing $320,000 with a four-year life and an estimated $33,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 512,500 units of product during its life. It actually produces the following units: year 1, 127,500; year 2, 129,000; year 3, 128,500; and year 4, 127,900. 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.)

Required:

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. (Round cost per unit to 2 decimal places. Round all final answers to the nearest whole dollar amount.)

Year Straight-Line Units of Production Double declining balance
$ $ $
1
2
3
4
Totals $ $ $

Solution Preview

A machine costing $320,000 with a four-year life and an estimated $33,000 salvage value is installed in Luther Company's factory on January 1.

The factory manager estimates the machine will produce 512,500 units of product during its life.
It actually produces the following units:
year 1, 127,500;
year 2, 129,000;
year 3, 128,500; and
year 4, 127,900. The total number of units produced by the end of ...

Solution Summary

This solution is comprised of a detailed explanation to compute depreciation using three methods for a $320,000 machine.

$2.19