Question

Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years, and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows:
Year ...... Units
1 ....... 70,000
2 ....... 67,000
3 ....... 50,000
4 ....... 73,000
5 ...... 40,000
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.
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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