P11-1 (L02) EXCEL GROUPWORK (Depreciation for Partial PeriodSL, SYD, and DDB) Alladin Company purchased Machine #201 on May 1, 2017. The following information relating to Machine #201 was gathered at the end of May.

Price Credit terms Freight-in Preparation and installation costs Labor costs during regular production operations

$85,000 2/10, n/30 $ 800 $ 3,800 $10,500

It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Alladin intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $1,500. The invoice for Machine #201 was paid May 5, 2017. Alladin uses the calendar year as the basis for the preparation of financial statements.

Instructions

1. (a) Compute the depreciation expense for the years indicated using the following methods. (Round to the nearest dollar.)

   1. (1) Straight-line method for 2017.

   2. (2) Sum-of-the-years-digits method for 2018.

   3. (3) Double-declining-balance method for 2017.

2. (b) SupposeKateCrow,thepresidentofAlladin,tellsyouthatbecausethecompanyisaneworganization,sheexpectsit will be several years before production and sales reach optimum levels. She asks you to recommend a depreciation method that will allocate less of the companys depreciation expense to the early years and more to later years of the assets lives. What method would you recommend?