313 PM Fri Apr + 10 EXAMPLE: Stamping Machine cost $125 000 with residual value of $15.000 Estimated life: Five years (or 250.000 units) TRY EACH METHOD (1) Straight-line method Expense Depreciable cost Afin years (Cost-residual values Year Depreciable Depreciation Annual Accumulated Book Value Cost Depreciation Depreciation (orig cost- Expense accum dep rate (2)Units of Activity Estimated productive life: 250,000 units Depreciation rate per unit = (depreciable cost/life in units = (125,000 - 15,000) / 250,000 = Year Units of Activity Depreciation rate per unit Annual Depreciation Expense Accumulated Depreciation Book Value 1 75.000 60,000 30,000 45,000 40.000 (3)Double-Declining-Balance Method: Expense = Book Value x 2 years = BV x 2 x st line% Year Beginning Depreciation Annual Depreciation Accumulated Book Book Value rate Expense Depreciation Value 1 * 1,200 110,000 15,000 ** calculated amount is too much, 1.200 yields correct accum deprand BV 1. What is the book value under the straight line method after 3 years? 2. What is depreciation expense, year 2 under double-declining? 3. What is accumulated depreciation, yearr 4 under units-of-production? 4. If the company should the machine for $55,000 at the end of year 3. what is the gain or loss a. if straight-line depreciation is used? b. if units of production is used