Your client, Burley Designs, recently acquired a new machine to build bicycle wheels for the tandems,...

 

Transcribed Image Text:

Your client, Burley Designs, recently acquired a new machine to build bicycle wheels for the tandems, recumbents and trailers they build. I Total machine cost after installation, calibrations and other related capitalized costs was $18,250. The machine has an expected life of 7 years with a residual value of $2000. The machine is capable of producing 20,000 wheels per year. Burley estimates that they will only ask the machine to produce as follows: Year 1 2 3 4 5 6 7 Anticipated Product Schedule - Wheels 13,500 14,250 15,000 16,200 17,000 18,000 19,100 Required: 1. Prepare and present depreciation schedules for the machine. Use straight line, units of production and the double declining methods of depreciation. 2. For each method make a brief explanation of how the schedules were determined. 3. Discuss an advantage and disadvantage of each method. 4. Recommend a particular depreciation method for Burley to use and support your recommendation with reasoning. 5. Remember that your audience is professional, but not accountants. Your client, Burley Designs, recently acquired a new machine to build bicycle wheels for the tandems, recumbents and trailers they build. I Total machine cost after installation, calibrations and other related capitalized costs was $18,250. The machine has an expected life of 7 years with a residual value of $2000. The machine is capable of producing 20,000 wheels per year. Burley estimates that they will only ask the machine to produce as follows: Year 1 2 3 4 5 6 7 Anticipated Product Schedule - Wheels 13,500 14,250 15,000 16,200 17,000 18,000 19,100 Required: 1. Prepare and present depreciation schedules for the machine. Use straight line, units of production and the double declining methods of depreciation. 2. For each method make a brief explanation of how the schedules were determined. 3. Discuss an advantage and disadvantage of each method. 4. Recommend a particular depreciation method for Burley to use and support your recommendation with reasoning. 5. Remember that your audience is professional, but not accountants.

Answer rating: 100% (QA)

1 Depreciation Schedule Method 1 StraightLine Depreciation Depreciation Expense Cost Residual Value Useful Life Year 1 18250 2000 7 232142 Year 2 18250 2000 7 232142 Year 3 18250 2000 7 232142 Year 4 ... View the full answer