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On January 2, Gannon Co. purchases and installs a new machine costing exist312,000 with a five-year life and an estimated exist28,000 salvage value. Management estimates
On January 2, Gannon Co. purchases and installs a new machine costing exist312,000 with a five-year life and an estimated exist28,000 salvage value. Management estimates the machine will produce 1, 136,000 units of product during its life. Actual production of units is as follows: year 1, 245, 600: year 2, 230, 400: year 3, 227,000: year 4, 232, 600: and year 5, 211, 200. The total number of units produced by the end of year 5 exceeds the original estimate - this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.) Compute depreciation for each year (and total depreciation for all years combined) for the machine under straight-line and units-of-production depreciation methods. For calculating units-of-production. Put your final calculations in the table above
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