On January 2, 2007, Half, Inc. purchased a manufacturing machine for \($864,000\). The machine has an eight-year estimated life and a \($144,000\) estimated salvage value. Half expects to manufacture 1,800,000 units over the machine’s life. During 2008, Half manufactured 300,000 units.
Required:
For each item, calculate depreciation expense for 2008 (the second year of ownership) for the machine just described under the method listed:
1. Straight-line 2. Double-declining balance 3. Sum-of-the-years’ digits 4 . Units-of-production (Hint: The units-of-production method was not discussed in the text but is easy to understand.
Depreciation is based on a ratio; the ratio numerator is production during the period and the denominator is estimated total production over the life of the machine. This ratio is then multiplied by the machine's cost minus salvage value to determine depreciation expense.)