P$9\mathrm{.}3$B $($LO $1,2)($Determine cost; calculate depreciation under different methods.$)$ Mouskori Limited purchased a machine on September $1,2024,$ at a cash price of $$187,800.$ On September $3,$ it paid $$1,200$ for delivery of the machine. A one$-$year, $$1,950$ insurance policy on the machine was purchased on September $6.$ On September $20,$ Mouskori paid $$7,000$ for installation and testing of the machine. The machine was ready for use on September $30.$

Mouskori estimates the machine's useful life will be four years, or $40,000$ units, with no residual value. Assume the equipment produces the following number of units each year:

$2,500$ units in $2024$: $10,300$ units in $2025$; $9,900$ units in $2026$; $8,800$ units in $2027$; and $8,500$ units in $2028.$ Mouskori has a December $31$ year end.

tions: On

Instructions

a$.$ Determine the cost of the machine.

b$.$ Calculate the annual depreciation and the total depreciation over the asset's life using

$(1)$ straight$-$line depreciation, $(2)$ double diminishing$-$balance depreciation, and $(3)$ units$-$of$-$production depreciation. Round the depreciation rate per unit to the nearest cent. Which method causes net income to be lower in the early years of the asset's life?

C$.$ Assume that the company, after recording depreciation using the straight$-$line method for the first nine months of $2026,$ determined on October $1,2026,$ that it could operate the machine for three more years and at the end of that time, its residual value would be $$2,000.$ Calculate the depreciation expense for the machine for the year ended

December $31,2026.$

d$.$ Assume that, when Mouskori Corporation purchased the machine, there was no residual value and the company had a legal obligation to ensure the machine would be recycled at the end of its useful life. The cost of this recycling will be significant. Would this have an impact on the answer to part $($a$)$ above? Explain.