A machine costing $210,000 with a four-year life and an estimated $20,000 salvage value is installed in

Question:

A machine costing $210,000 with a four-year life and an estimated $20,000 salvage value is installed in Calhoon Companyâ€™s factory on January 1. The factory manager estimates the machine will produce 475,000 units of product during its life. It actually produces the following units: year 1, 121,400; year 2, 122,400; year 3, 119,600; and year 4, 118,200. The total number of units produced by the end of year 4 exceeds the original estimate â€” this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)

Required

Prepare a table with the following column headings and compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciationmethod.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...