Problem 10-3A (Part Level Submission)

On January 1, 2017, Evers Company purchased the following two machines for use in its production process.

Machine A:		The cash price of this machine was $39,000. Related expenditures included: sales tax $1,800, shipping costs $150, insurance during shipping $70, installation and testing costs $70, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $4,350 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B:		The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $9,950 salvage value remaining at the end of that time period.

(b) Your answer is correct. Calculate the amount of depreciation expense that Evers should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to o decimal place e.g. 2,125.) (1) Evers uses the straight-line method of depreciation. (2) Evers uses the declining-balance method. The rate used is twice the straight-line rate. (3) Evers uses the units-of-activity method and estimates that the useful life of the machine is 156,650 units. Actual usage is as follows: 2017, 58,000 units; 2018, 44,000 units; 2019, 30,000 units; 2020, 24,650 units. 2017 Depreciation Expense 2018 2019 2020 Straight-line method 42513 42513 42513 42513 Declining-balance method 90000 45000 22500 9 49 49 4 12550 Units-of-activity method 62961.38 47763.8 32566.23 26758.59 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT (c) Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2017)? The highest amount in year 4 (2020)? The highest total amount over the 4-year period? Declining-balance method Straight-line method Units-of-activity method All of the above Attempts: 0 of 2 used