Depreciation Methods

On January 2, 2015, Roth, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $90,000, and its estimated useful life was four years or 850,000 cuttings, after which it could be sold for $5,000.

A. Calculate each year's depreciation expense for the machine's useful life under each of the following depreciation methods:

1. Straight-line.

2. Double-declining balance.

3. Units of production. Assume annual production in cuttings of 200,000; 350,000; 260,000; and 40,000.

B. Assume that the machine was purchased on July 1, 2015. Calculate each year's depreciation expense for the machine's useful life under each of the following depreciation methods:

1. Straight-line.

2. Double-declining balance.