A machine that produces cellphone components is purchased on January 1, 2016, for $100,000. It is expected
Question:
A machine that produces cellphone components is purchased on January 1, 2016, for $100,000. It is expected to have a useful life of four years and a residual value of $10,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2016, 50,000 in 2017, 60,000 in 2018, and 50,000 in 2019. The company has a December 31 year end.
Required:
a. Calculate the amount of depreciation to be charged each year, using each of the following methods:
i. Straight-line method
ii. Units-of-production method
iii. Double-diminishing-balance method
b. Which method results in the highest depreciation expense?
i. during the first two years?
ii. over all four years?
Step by Step Answer:
Understanding Financial Accounting
ISBN: 978-1118849385
1st Canadian Edition
Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald