Question

Ohio Box Co. purchased a bundling machine on January 1, 2009, for a cost of $22,800. The machine is expected to last 5 years, or bundle 660,000 items, at which time it should have a salvage value of $3,000. A counter on the machine revealed that the machine was used at the following levels: 2009, 110,000 bundles; 2010, 140,000 bundles; 2011, 150,000 bundles; 2012, 141,800 bundles; and 2013, 152,000 bundles.
Required:
(a) How much depreciation will be taken each year if the straight-line method of depreciation is used? Show calculations.
(b) What depreciation method is Ohio Box using if the depreciation expense in 2010 is $4,200? Show calculations.
(c) What depreciation method is Ohio Box using if the depreciation expense in 2010 is $5,472? Show calculations.
(d) At the end of the five-year useful life, what will be the (1) ending book value and (2) the balance of accumulated depreciation?
(e) Assume that Ohio Box uses the double-declining-balance method of depreciation. What is the depreciation expense in year 5?
(f) Assume that Ohio Box uses the units-of-production method of depreciation. What is the depreciation expense in year 5?


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  • CreatedMarch 27, 2015
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