Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2019. The machine's residual value was $425 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. 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?