Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of $10,000. The estimated useful life was four years, and the residual value was $1,000. Assume that the estimated productive life of the machine was 9,000 hours. Actual annual usage was 3,600 hours in year 1; 2,700 hours in year 2; 1,800 hours in year 3; and 900 hours in year 4.

Required:

1. Complete a separate depreciation schedule for each of the alternative methods. Round your answers to the nearest dollar.

a. Straight-line.

b. Units-of-production (use four decimal places for the per unit output factor).

c. Double-declining-balance.

2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might management consider in selecting a preferable depreciation method in conformity with the matchingprinciple?

Transcribed Image Text:

Method: Depreciation Expense Net Book Value Accumulated Year Computation Depreciation At acquisition 1 etc.