On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of units is as follows: 355,600 in Year 1, 320,400 in Year 2, 317,000 in Year 3, 343,600 in Year 4, and 138,500 in Year 5. The total number of units produced by the end of Year 5 exceeds the original estimate—this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value. Required: Prepare a table Units-of-production: Year Number of Units Depreciation per Unit Depreciation Expense 1 2 3 4 5 Totals Double-declining-balance: Year Beginning Book Value Annual Depreciation (40% of book value) Accumulated Depreciation at Year-End Ending Book Value ($324,000 Cost less Accumulated Depreciation) 1 2 3 4 5 Totals Double-declining-balance rate: Straight-line rate Multiplied by (Double) DDB Rate
On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of units is as follows: 355,600 in Year 1, 320,400 in Year 2, 317,000 in Year 3, 343,600 in Year 4, and 138,500 in Year 5. The total number of units produced by the end of Year 5 exceeds the original estimate—this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value. Required: Prepare a table Units-of-production: Year Number of Units Depreciation per Unit Depreciation Expense 1 2 3 4 5 Totals Double-declining-balance: Year Beginning Book Value Annual Depreciation (40% of book value) Accumulated Depreciation at Year-End Ending Book Value ($324,000 Cost less Accumulated Depreciation) 1 2 3 4 5 Totals Double-declining-balance rate: Straight-line rate Multiplied by (Double) DDB Rate
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 3CE: A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years....
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On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000 units of product during its life. Actual production of units is as follows: 355,600 in Year 1, 320,400 in Year 2, 317,000 in Year 3, 343,600 in Year 4, and 138,500 in Year 5. The total number of units produced by the end of Year 5 exceeds the original estimate—this difference was not predicted. Note: The machine cannot be
Required:
Prepare a table
| Units-of-production: |
| Year | Number of Units | Depreciation per Unit | Depreciation Expense |
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| Totals |
| Double-declining-balance: | ||||
| Year | Beginning Book Value | Annual Depreciation (40% of book value) | Ending Book Value ($324,000 Cost less Accumulated Depreciation) | |
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Totals | ||||
| Double-declining-balance rate: | ||||
| Straight-line rate | Multiplied by (Double) | DDB Rate | ||
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