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Depreciation Methods Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2019. The machine’s residual value was $42S and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies the first year and 400,000 the second year. Required: 1. Compute depreciation expense for 2019 and 2020 using the (a) straight-line method, (b) double-declining-balance method, and (c) units-of-production method. 2. For each depreciation method, what is the book value of the machine at the end 2019? At the end of the 2020? 3. CONCEPTUAL CONNECTION Assume that Berkshire uses the double-declining-balance method of depreciation. What is the effect on assets and income relative to if Berkshire had used the straight-line method of depreciation instead of the double-declining-balance method of depreciation?

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

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Chapter
Section
Chapter 7, Problem 48E
Textbook Problem

Depreciation Methods

Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2019. The machine’s residual value was $42S and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies the first year and 400,000 the second year.

Required:

1. Compute depreciation expense for 2019 and 2020 using the (a) straight-line method, (b) double-declining-balance method, and (c) units-of-production method.

2. For each depreciation method, what is the book value of the machine at the end 2019? At the end of the 2020?

3. CONCEPTUAL CONNECTION Assume that Berkshire uses the double-declining-balance method of depreciation. What is the effect on assets and income relative to if Berkshire had used the straight-line method of depreciation instead of the double-declining-balance method of depreciation?

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Chapter 7 Solutions

Cornerstones of Financial Accounting
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