Havana Company purchased a carton fabrication unit for $247,500 on January 8, 20X1. The machine’s useful life is estimated as 3,000,000 units of product or eight years, and its salvage value is estimated at $22,500. The number of cartons fabricated in each year, 20X1 to 20X3, is as follows:

INSTRUCTIONS
Compute the depreciation expense and accumulated depreciation at year-end for each of the three years under (1) the straight-line method and (2) the units-of-production method.

Analyze: If the units-of-output method were used, what would be the book value of the machine at the end of 20X3?

Transcribed Image Text:

Year 20X1 20X2 20X3 Cartons Fabricated 160,000 168,400 236,000