Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2011. The machine’s residual value was $425 and its expected life was five years or 2,000,000 copies. Actual usage was 480,000 copies the first year and 400,000 the second year.

1. Compute depreciation expense for 2011 and 2012 using the (a) straight-line method, (b) double-declining-balance method, and (c) units-of-production method.
2. For each depreciation method, what is the book value of the machine at the end 2011? At the end of the 2012?
3. Assume that Berkshire uses the double-declining-balance method of depreciation. What is the effect on assets and income relative to if Berkshire had used the straight-line method of depreciation instead of the double-declining-balance method of depreciation?

  • CreatedSeptember 22, 2015
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