. The SweetNSourCandy GmbH purchased a new packaging machine at a cost of €120,000 to extend its production line. It is expected to have a residual value of €20,000 at the end of its useful economic life of ten years. Replacing the machine at the end of its lifecycle is estimated at a cost of €150,000.

1. Calculate the depreciation base.

2. Calculate complete depreciation schedules using:

a. Straight-line method

b. Accelerated depreciation method

c. Units of production method Expected output for years 1 to 10 looks as follows:

3. After three years of production, the technician recognizes severe signs of aging on the packaging machine. Thereupon, the production line supervisor informs you that he believes the useful economic life to be lower than estimated. Advise your management accountants on how to deal with this issue.

Transcribed Image Text:

Year Expected output 1 350,000 2 350,000 345 320,000 310,000 330,000 6 350,000 7 340,000 8 320,000 9 300,000 10 290,000 Total 3,260,000