Depreciation Methods
On January 2, 2015, Alvarez Company purchased an electroplating machine to help manufacture a part for one of its key products. The machine cost $218,700 and was estimated to have a useful life of six years or 700,000 cuttings, after which it could be sold for $23,400.
Required
a. Calculate each year’s depreciation expense for the period 2015-2020 under each of the following depreciation methods (round all answers to the nearest dollar):
1. Straight-line.
2. Double-declining balance.
3. Units-of-production. (Assume annual production in platings of: 140,000; 180,000; 100,000; 110,000; 80,000; and 90,000.)
1. Straight-Line
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 |
2. Double-declining balance
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 |
3. Units of Production
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 |
b. Assume that the machine was purchased on September 1, 2015. Calculate each year’s depreciation expense for the period 2015-2020 under each of the following depreciation methods:
1. Straight-line.
2. Double-declining balance.
1. Straight-Line
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 | |
| 2021 |
2. Double-declining balance
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 | |
| 2021 |
