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Computing Depreciation under Alternative Methods Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000.
Computing Depreciation under Alternative Methods Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of $950,000. The estimated residual value was $50,000. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Required: Year 12345 Units 70,000 67,000 50,000 73,000 40,000 Page 446 1. Complete a separate depreciation schedule for each of the alternative methods. A sample schedule is shown below. Round your answers to the nearest dollar. a. Straight-line. b. Units-of-production (use two decimal places for the per unit output factor). c. Double-declining-balance. Method: Year Computation Depreciation Expense Accumulated Depreciation Net Book Value At acquisition 1 2 etc. 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 expense recognition (matching) principle?
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