Question 5: Depreciation (12 marks)

A machine costing $550,000 has an estimated residual value of $40,000 and an estimated service life of 12 years. What is the annual depreciation for each of the first two years under the following methods? Assume the company records a full year of depreciation in the year of purchase. Round all answers to the nearest dollar.

1. Double declining-balance
2. Units of production. Lifetime production is estimated to be 300,000 units. The machine produced 26,000 units in year one, and 29,000 units in year two.
3. Straight-line depreciation method.