Beans Company purchased a special machine at a cost of $ 81,000 plus provincial sales tax of $ 6,480 (non- recoverable). The machine is expected to have a residual value of $ 6,000 at the end of its service life. To assist in preparing the journal entries for depreciation of this machine, your assistant prepared the following spreadsheet:

The spreadsheet includes statistics relating to the machine and calculates depreciation using three different methods€” productive output, straight- line, and declining balance at a 50% rate. However, due to some carelessness, your assistant made at least one error in the calculations for each method.

Required:
1. Identify which method is the:
a. Productive method.
b. Straight- line method.
c. Declining- balance method ( 50% rate).
2. Describe the error(s) made in the calculations for each method.
3. Recalculate depreciation expense for Year 2 under each method.

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BEANS COMPANY Cost of asset Asset's residual value Years of service life Output in units $87,480 6,000 4 Year 1 Year 2 Year 3 Year 4 1,400 1,300 1,000 1,100 4,800 Method 3 Depreciation Accumulated Total expected output Method 1 Method 2 Depreciation Accumulated Depreciation Accumulated Expense Depreciation Expense Depreciation Depreciation $21,870 43,740 65,610 87,480 Year Expense $21,870 16,403 12,302 36,905 $87480 $21,870 38,273 50,575 87,480 $27,265 25,318 19,475 21,422 93,480 27,265 52,583 72,058 93,480 $21,870 21,870 1,870 21.870 $87 480 4 Total