Question
On January 2, 2015 Gillette Co. purchases and installs a new machine costing $300,000 with a five-year life and an estimated $50,000 salvage value.
On January 2, 2015 Gillette Co. purchases and installs a new machine costing $300,000 with a five-year life and an estimated $50,000 salvage value. Management estimates the machine will produce 190,000 units of product during its life. Actual production of units is as follows: year 2015 - 34,000 units: year 2016 - 46,000 units; year 2017 - 56,000 units; year 2018 - 28,000 units; year 2019 26,000 units, etc. Compute depreciation expense, accumulate depreciation, and book value for the first four years using the following depreciation methods: (1) the straight-line method, (2) the units-of-production method, and (3) the declining-balance method also known as the double-declining-balance method.
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