Question
Question 1: (Units-of-Production, Straight-Line, and DDB) Rocky Bay Mining Company (Rocky Bay) buys special drills for $640,000 each. Each drill can extract about 150,000 tons
Question 1: (Units-of-Production, Straight-Line, and DDB)
Rocky Bay Mining Company (Rocky Bay) buys special drills for $640,000 each. Each drill can extract about 150,000 tons of ore, after which it has a $40,000 residual value. Rocky Bay bought one such drill in early January 2019. Projected tonnage figures for the drill are 70,000 tons in 2019, 45,000 tons in 2020, and 35,000 tons in 2021. The drill is scheduled for sale at the end of the third year at the $40,000 residual value. Rocky Bay is considering units-of-production, straight-line, or double declining balance (DDB) depreciation for the drill.
Compute depreciation for each year under each of the three methods.
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