Consider a $6500 piece of machinery, with a 5-year depreciable life and an estimated $1200 salvage value

Question:

Consider a $6500 piece of machinery, with a 5-year depreciable life and an estimated $1200 salvage value. The projected utilization of the machinery when it was purchased, and its actual production to date are shown below.

Projected Actual Year Production (tons) Production (tons) 3500 3000 1 4000 5000 4500 Not 4 5000 Yet 5500 Known

Compute the machinery depreciation schedule by each of the following methods:

(a) Straight line.

(b) Sum-of-years' -digits.

(d) Unit of production (for first 2 years only).

(e) Modified accelerated cost recovery system.

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing... 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...