Rita's Pita Company bought a new dough machine at the beginning of the year at a cost

Question:

Rita's Pita Company bought a new dough machine at the beginning of the year at a cost of \(\$ 7,600\). The estimated useful life was four years, and the residual value was \(\$ 800\). Assume that the estimated productive life of the machine is 10,000 hours. Annual usage was 3,600 hours in year 1 ; 3,200 hours in year 2; 2,200 hours in year 3; and 1,200 hours in year 4 .

Required:
1. Complete a separate depreciation schedule for each of the alternative methods. Round your computations to the nearest dollar.

a. Straight-line

b. Units-of-production

c. Double-declining-balance 2. Assuming that the machine was used directly in the production of one of the products that the company manufactures and sells, what factors might management consider in selecting a preferable depreciation method in conformity with the matching process?

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Financial Accounting

ISBN: 9780070001497

4th Canadian Edition

Authors: Patricia A. Libby, Daniel Short, George Kanaan, Maureen Libby Gowing, Robert Libby

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