Question: Lord Company purchased a machine on January 2 2016 for

Lord Company purchased a machine on January 2, 2016, for $ 70,000. The machine had an expected residual value of $ 10,000, an expected life of 8 years or 24,000 hours, and a capacity to produce 100,000 units. During 2016, Lord produced 12,000 units in 2,500 hours. In 2017, Lord produced 15,000 units in 3,000 hours.
1. Prepare a schedule showing depreciation expense for 2016 and 2017 and the book value of the asset at the end of 2016 and 2017 for each of the following methods (round your answers to the nearest dollar):
a. straight- line method
b. activity method base on hours worked
c. activity method based on units of output
d. sum- of- the- years’- digits method
e. double- declining- balance method
2. Next Level Under what conditions would it be appropriate to use each of the depreciation methods discussed above?

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  • CreatedOctober 05, 2015
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