Question: E9-6 Computing Depreciation under Alternative Methods [LO 9-3] Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $22,000.

E9-6 Computing Depreciation under Alternative Methods [LO 9-3]

Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $22,000. The estimated useful life was five years and the residual value was $2,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was year 1, 2,000 units; year 2, 3,000 units; year 3, 2,000 units; year 4, 2,000 units; and year 5, 1,000 units.

Required:

Complete a depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance.

Which method will result in the highest net income in year 2? Does this higher net income mean the machine was used more efficiently under this depreciation method?

1a.

E9-6 Computing Depreciation under Alternative Methods [LO 9-3] Solar Innovations Corporation bought

1b.

a machine at the beginning of the year at a cost of

1c.

$22,000. The estimated useful life was five years and the residual value

2a.

was $2,000. Assume that the estimated productive life of the machine is

2b.

10,000 units. Expected annual production was year 1, 2,000 units; year 2,

Income Statement Balance Sheet Depreciation Expense Accumulated Year Cost Depreciation Book Value At acquisition 4

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