Purchase Solution

# Problem 10-5A Calhoon Company

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##### Solution Summary

The solution explains the journal entires for asset acquisition and disposal and the calculation of depreciation amount under straight line, units of production and double declining balance method.

##### Solution Preview

Part 1. A machine costing \$210,000 with a four-year life and an estimated \$20,000
salvage value is installed in Calhoon Company's factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its life. It actually produces the
following units: year 1, 121,400; year 2, 122,400; year 3, 119,600; and year 4, 118,200. 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
Prepare a table with the following column headings and compute depreciation for each
year (and total
depreciation of all years combined) for the machine under each depreciation method.
YEAR STRAIGHT-LINE UNITS OF PRODUCTION DOUBLE DECLINING BALANCE Year
Straight-Line Units-of-Production Double-Declining-Balance

Cost of machine \$210,000
Less estimated salvage value 20,000
Total depreciable cost \$190,000

Year
Straight-Linea
Units-of-Productionb Double-Declining-
Balancec
1 \$ 47,500 \$ ...

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