Essay Problem #1

The Jefferson Co. purchased a machine on January 1, 2016. The machine cost $595,000. It had an estimated life of ten years, or 30,000 units, and an estimated residual value of $40,000. In 2016, Jeffries produced 3,000 units.

Required:

Compute the depreciation charge for 2016 using each of the following methods:

a. Double-declining-balance method

b. Activity method (units of output)

c. Sum-of-the-years'-digits method

d. Straight-line method