Identify and Recalculate Depreciation:

Beans Company purchased a special machine at a cost of $81,000 plus provincial sales tax of $6,480 (non-recoverable). Component parts are not significant and need not be recognized and depreciated separately. The machine is expected to have a residual value of $6,000 at the end of its service life.

To assist in preparing the journal entries for depreciation of this machine, your assistant prepared the following spreadsheet:

BEANS COMPANY
Cost of asset			$87,480
Assets residual value			6,000
Years of service life			4
Output in units	Year 1	1,400
	Year 2	1,300
	Year 3	1,000
	Year 4	1,100
Total expected output			4,800

	Method 1		Method 2		Method 3
Year	Depreciation Expense	Accumulated Depreciation	Depreciation Expense	Accumulated Depreciation	Depreciation Expense	Accumulated Depreciation
1	$21,870	$21,870	$27,265	$27,265	$21,870	$21,870
2	16,403	38,273	25,318	52,583	21,870	43,740
3	12,302	50,575	19,475	72,058	21,870	65,610
4	36,905	87,480	21,422	93,480	21,870	87,480
Total	$87,480		$93,480		$87,480

Page 637The spreadsheet includes statistics relating to the machine and calculates depreciation using three different methodsproductive-output, straight-line, and declining-balance at a 50% rate. However, due to some carelessness, your assistant made at least one error in the calculations for each method.

Required:

1. Identify which method is the:

   1. Productive-output method

   2. Straight-line method

   3. Declining-balance method (50% rate)

2. Describe the error(s) made in the calculations for each method.

3. Recalculate depreciation expense for Year 2 under each method.