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    Depreciation charge

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    Pemberton Corp. purchased a machine costing $300,000 that had an estimate useful life of six years and residual value of $18,000. The machine is expected to produce 3,525,000 units during its useful life, as follow:

    1 930,000
    2 800,000
    3 580,000
    4 500,000
    5 415,000
    6 300,000

    a. What will be each year's depreciation charge if Pemberton uses the units-of production method?
    b. Will this give significantly different depreciation charges in each year than the sum-of-the-years' digits method?

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    Solution Summary

    Solution contains calculations of depreciation charges under the units-of production method and sum-of-the-years' digits method.