Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $39,000. The estimated useful life was fiveyears and the residual value was $4,000. Assume that the estimated productive life of the machine is 20,000 units. Expected annualproduction was year 1, 4,600 units; year 2, 5,600 units; year 3, 4,600 units; year 4, 4,600 units; and year 5, 600 unitsRequired00-59151. Complete a depreciation schedule for each of the alternative methods.a. Straight-line.b. Units-of-production.c. Double-declining-balance.2. Which method will result in the highest net income in year 2? Does this higher net income mean the machine was used moreeBookefficiently under this depreciation method?Complete this question by entering your answers in the tabs below.Req 1AReq 1BReq 1CReq 2AReq 2BComplete a depreciation schedule for Straight-line method. (Do not round intermediate calculations.)IncomeStatementBalance SheetDepreciationExpenseYearCostDepreciation Bok ValueAt acquisition2345Req 1AReq 1B>
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Solar Innovations Corporation bought a machine at the beginning of the year at a cost of $39,000. The estimated useful life was five years and the residual value was $4,000. Assume that the estimated productive life of the machine is 20,000 units. Expected annual production was year 1, 4,600 units; year 2, 5,600 units; year 3, 4,600 units; year 4, 4,600 units; and year 5, 600 units Required 00-59151. Complete a depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance. 2. Which method will result in the highest net income in year 2? Does this higher net income mean the machine was used more eBook efficiently under this depreciation method? Complete this question by entering your answers in the tabs below. Req 1AReq 1B Req 1C Req 2AReq 2B Complete a depreciation schedule for Straight-line method. (Do not round intermediate calculations.) Income Statement Balance Sheet Depreciation Expense Year Cost Depreciation Bok Value At acquisition 2 3 4 5 Req 1A Req 1B>
The Depreciation under SLM basis has been computed as under:
| Cost of Machine | 39000 | |||||
| Less: Salvage Value | 4000 | |||||
| Depreciable ccost | 35000 | |||||
| Divide: Life | 5 | |||||
| Annual Depreciation | 7000 | |||||
| Schedule for Dep under SLM: | ||||||
| Income Statement | Balance Sheet | |||||
| Year | Depreciation expense | Cost | Acc. Dep | Book Value | ||
| At Acquisition | 39000 | 0 | 39000 | |||
| 1 | 7000 | 39000 | 7000 | 32000 | ||
| 2 | 7000 | 39000 | 14000 | 25000 | ||
| 3 | 7000 | 39000 | 21000 | 18000 | ||
| 4 | 7000 | 39000 | 28000 | 11000 | ||
| 5 | 7000 | 39000 | 35000 | 4000 | ||
| Depreciation under Units of Production: | ||||||||||||
| Cost of Machine | 39000 | |||||||||||
| Less: Salvage Value | 4000 | |||||||||||
| Depreciable ccost | 35000 | |||||||||||
| Divide: Life | 20000 | units | ||||||||||
| Depreciation per unit | 1.75 | |||||||||||
| Year | Units | Dep rate | Dep expense | |||||||||
| 1 | 4600 | 1.75 | 8050 | |||||||||
| 2 | 5600 | 1.75 | 9800 | |||||||||
| 3 | 4600 | 1.75 | 8050 | |||||||||
| 4 | 4600 | 1.75 | 8050 | |||||||||
| 5 | 5600 | 1.75 | 1050 | (9800-8750) | ||||||||
| Here the Total Dep is $ 43750 but the depreciabble cost is $ 35000. Therefore, $ 8750 shall be needed to be adjusted in Last year depreciation | ||||||||||||
| Schedule for Dep under UOP: | ||||||||||||
| Income Statement | Balance Sheet | |||||||||||
| Year | Depreciation expense | Cost | Acc. Dep | Book Value | ||||||||
| At Acquisition | 39000 | 0 | 39000 | |||||||||
| 1 | 8050 | 39000 | 8050 | 30950 | ||||||||
| 2 | 9800 | 39000 | 17850 | 21150 | ||||||||
| 3 | 8050 | 39000 | 25900 | 13100 | ||||||||
| 4 | 8050 | 39000 | 33950 | 5050 | ||||||||
| 5 | 1050 | 39000 | 35000 | 4000 | ||||||||
| Depreciation under DDB: | |||||||||||
| Rate of Dep under SLM (100/5) : 20% | |||||||||||
| Rate of Dep under DDB (20% *2 ) = 40% | |||||||||||
| Schedule for Dep under DDB: | |||||||||||
| Income Statement | Balance Sheet | ||||||||||
| Year | Depreciation expense | Cost | Acc. Dep | Book Value | |||||||
| At Acquisition | 39000 | 0 | 39000 | ||||||||
| 1 | 15600 | 39000 | 15600 | 23400 | |||||||
| 2 | 9360 | 39000 | 24960 | 14040 | |||||||
| 3 | 5616 | 39000 | 30576 | 8424 | |||||||
| 4 | 3370 | 39000 | 33946 | 5054 | |||||||
| 5 | 1054 | 39000 | 35000 | 4000 | |||||||
| ($2022 but restricted to $1054) | |||||||||||
| Note: The last year dep underr DDB is $ 2022 (i.e. 5054*40%) however, it will exceed the total ddep from epreciable cost. | |||||||||||
| hence, the last year depreciation has to be adjusted for keeping the... |
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