Question 1 Oriole Limited purchased a machine on account on April 2, 2018, at an invoice price of $394,970. On April 4, it paid $1,960 for delivery of the machine. A one-year, $4,110 insurance policy on the machine was purchased on April 5. On April 18, Oriole paid $7,890 for installation and testing of the machine. The machine was ready for use on April 30. Oriole estimates the machines useful life will be five years or 6,281 units with a residual value of $81,000. Assume the machine produces the following numbers of units each year: 874 units in 2018; 1,431 units in 2019; 1,465 units in 2020; 1,357 units in 2021; and 1,154 units in 2022. Oriole has a December 31 year end.

Determine the cost of the machine.

Cost of the machine

$

Calculate the annual depreciation and total depreciation over the assets life using: (Round the depreciation cost per unit to the nearest cent. Round answers to 0 decimal places, e.g. 5,275.) (1) Straight-line method

Year		Depreciable Cost		Depreciation Expense		Accumulated Depreciation		Carrying Amount
2018		$		$		$		$
2019
2020
2021
2022
2023

(2) Double-diminishing-balance method

Year		Opening Carrying Amount		Depreciation Expense		Accumulated Depreciation		Carrying Amount
2018		$		$		$		$
2019
2020
2021
2022
2023

(3) Units-of-production method

Year		Units-of-production		Depreciation Expense		Accumulated Depreciation		Carrying Amount
2018				$		$		$
2019
2020
2021
2022

Which method causes net income to be lower in the early years of the assets life?

Straight-Line MethodUnits-of-Production MethodDouble-Diminishing-Balance Method