Depreciation Methods
On January 2, 2015, Roth, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $100,000, and its estimated useful life was four years or 950,000 cuttings, after which it could be sold for $5,000.
Required
a. Calculate each year’s depreciation expense for the machine’s useful life 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 cuttings of 220,000; 370,000; 300,000; and 60,000.)
1. Straight-Line
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
2. Double-declining balance
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
3. Units of Production
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
b. Assume that the machine was purchased on July 1, 2015. Calculate each year’s depreciation expense for the machine’s useful life 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 | |
2. Double-declining balance (Round answers to the nearest whole number, when appropriate.)
| Year | Depreciation Expense |
|---|---|
| 2015 | $ |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
