Computing Depreciation under Alternative Methods Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 page 446 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. A sample schedule is shown below. Round your answers to the nearest dollar. a. Straight-line. b. Units-of-production (use two decimal places for the per unit output factor). c. Double-declining-balance. Method: Depreciation Expense Accumulated Depreciation Year Computation Net Book Value At acquisition 1 2 etc. 2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might managemen consider in selecting a preferable depreciation method in conformity with the expense recognition (matching) principle?
Computing Depreciation under Alternative Methods Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 page 446 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. A sample schedule is shown below. Round your answers to the nearest dollar. a. Straight-line. b. Units-of-production (use two decimal places for the per unit output factor). c. Double-declining-balance. Method: Depreciation Expense Accumulated Depreciation Year Computation Net Book Value At acquisition 1 2 etc. 2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might managemen consider in selecting a preferable depreciation method in conformity with the expense recognition (matching) principle?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 5P: Group and Composite Depreciation Chcadle Company purchased a fleet of 20 delivery trucks for 8,000...
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Transcribed Image Text:Computing Depreciation under Alternative Methods
Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the
estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows:
Year
Units
1
70,000
2
67,000
3
50,000
4
73,000
5
40,000
page 446
Required:
1. Complete a separate depreciation schedule for each of the alternative methods. A sample schedule is shown below. Round your answers to the nearest dollar.
a. Straight-line.
b. Units-of-production (use two decimal places for the per unit output factor).
c. Double-declining-balance.
Method:
Depreciation Expense Accumulated Depreciation
Net
Year
Computation
Book Value
At acquisition
1
2
etc.
2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might management
consider in selecting a preferable depreciation method in conformity with the expense recognition (matching) principle?
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