Depreciation Methods

Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2013. 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 2013 and 2014 using the:

a. Straight-line method.

Depreciation expense $ per year

b. Double-declining-balance method.

	Depreciation Expense
2013	$
2014	$

c. Units-of-production method. (Do not round intermediate calculations.)

	Depreciation Expense
2013	$
2014	$

2. For each depreciation method, what is the book value of the machine at the end of 2013? At the end of 2014?

		2013	2014
a.	Straight-line method	$	$
b.	Double-declining-balance method	$	$
c.	Units-of-production method	$	$

3. Conceptual Connection: 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?