On 11/1/X1 JacobCo Inc. hired an external engineering firm to design a new production line to produce a new fishing lure product line. The design of the new production line was completed on 11/28/X1 and JacobCo. Inc. received an invoice from the engineering firm in amount of $225,000. Construction started on a new production line on 12/8/X1 and was completed on 12/31/X1. The total construction cost of the new production line was $895,000. Interest expense from 11/1/X1 when the project was started to 12/31/X1 when it was completed amounted to $43,000 in total. Of that total interest expense $4,200 was attributable to the new production line.

The production line had an estimated engineering physical life of eight years. It is estimated that the production line could be scrapped and have a salvage value of approximately $30,000 at the end of that time.

The marketing department estimated that the new fishing lure product line would provide revenues to JacobCo. Inc. for the next five years. At the end of that time period the fishing lure product line will be discontinued and the production line will be scrapped and will sold for $10,000. The marketing department also estimates that the total number of fishing lures that will be sold over the next five years will be 500,000 units. The production line started into operation on 1/1/X2.

Required: Calculate depreciation for 12/31/X2 and 12/31/X3 and make the required journal entries using :

A. Straight line depreciation.

B. 200% double declining balance.

C. Units of Production assuming that 102,500 lures were produced in the year ending 12/31/X2 and 91,000 lures were produced in the year ending 12/31/X3.

DATE	ACCOUNT	DR	CR