Question

Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of $9,000. The estimated useful life was four years, and the residual value was $1,000. Assume that the estimated productive life of the machine was 16,000 hours. Actual annual usage was 5,500 hours in year 1; 3,800 hours in year 2; 3,200 hours in year 3; and 3,500 hours in year 4.

Required:
1. Complete a separate depreciation schedule for each of the alternative methods. Round your answers to the nearest dollar.
a. Straight-line.
b. Units-of-production (use four decimal places for the per unit output factor).
c. Double-declining-balance.


2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might management consider in selecting a preferable depreciation method in conformity with the expense matchingprinciple?


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  • CreatedJuly 01, 2014
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