Graphic Design Inc. purchased a state-of-the-art laser engraving machine for $90,000. Parker determined that the system had
Question:
Graphic Design Inc. purchased a state-of-the-art laser engraving machine for $90,000. Parker determined that the system had an expected life of 10 years (or 2,000,000 items engraved) and an expected residual value of $5,400.
Required:
1. Determine the amount of depreciation expense for the first and second years of the machine's life using the
(a) Straight-line
(b) Double-declining-balance depreciation methods.
2. If the number of items engraved the first and second years was 205,000 and 187,000 respectively, compute the amount of depreciation expense for the first and second years of the machine's life using the units-of-production depreciation method.
3. Compute the book values for all three depreciation methods as of the end of the first and second years of the system's life.
Step by Step Answer:
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger