Zulu Company purchased a carton fabrication unit for $495,000 on January 8, 2019. The machines useful life
Question:
Zulu Company purchased a carton fabrication unit for $495,000 on January 8, 2019. The machine’s useful life is estimated as 3,000,000 units of product or eight years and its salvage value is estimated at $45,000. The number of cartons fabricated in each year, 2019 to 2021, is as follows:
Year Cartons Fabricated
2019.......................................320,000
2020.......................................336,800
2021.......................................472,000
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 2020?
Salvage ValueSalvage 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...
Step by Step Answer:
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina