Chapter 9, Problem 6E

Computing Depreciation under Alternative Methods

Solar innovations Corporation bought a machine at the beginning of the year at a cost of $22,000.

The estimated useful life was five years and the residual value was $2,000. Assume that the estimated productive life of the machine is 10,000 units. Expected annual production was year 1, 2,000 units; year 2, 3,000 units; year 3, 2,000 units; year 4, 2,000 units; and year 5, 1.000 units.

Required:

1. 1. Complete a depreciation schedule for each of the alternative methods. Round answers to the nearest dollar.
   1. a. Straight-line.
   2. b. Units-of-production.
   3. c. Double-declining-balance.

1. 2. Which method will result in the highest net income in year 2? Does this higher net income mean the machine was used more efficiently under this depreciation method?