Ohio Box Co. purchased a bundling machine on January 1, 2009, for a cost of $22,800. The

Question:

Ohio Box Co. purchased a bundling machine on January 1, 2009, for a cost of $22,800. The machine is expected to last 5 years, or bundle 660,000 items, at which time it should have a of $3,000. A counter on the machine revealed that the machine was used at the following levels: 2009, 110,000 bundles; 2010, 140,000 bundles; 2011, 150,000 bundles; 2012, 141,800 bundles; and 2013, 152,000 bundles.
Required:
(a) How much depreciation will be taken each year if the straight-line method of depreciation is used? Show calculations.
(b) What depreciation method is Ohio Box using if the depreciation expense in 2010 is $4,200? Show calculations.
(c) What depreciation method is Ohio Box using if the depreciation expense in 2010 is $5,472? Show calculations.
(d) At the end of the ﬁve-year useful life, what will be the (1) ending book value and (2) the balance of accumulated depreciation?
(e) Assume that Ohio Box uses the double-declining-balance method of depreciation. What is the depreciation expense in year 5?
(f) Assume that Ohio Box uses the units-of-production method of depreciation. What is the depreciation expense in year 5?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...