Question
This and that Manufacturing purchases a machine for production on 01/01/19. PURCHASE PRICE $700,000 INSTALLATION COST $10,000 DELIVERY $5,000 FOB SHIPING POINT Cost to train
This and that Manufacturing purchases a machine for production on 01/01/19.
PURCHASE PRICE $700,000
INSTALLATION COST $10,000
DELIVERY $5,000 FOB SHIPING POINT
Cost to train worker 5,000 to use equipment.
SALIVAGE VALUE $70,000.
Employee salary $75000 to use machine
Estimated increase in profit from machine $200,000
ANNUAL MAINTENCE $1,000
USEFUL LIFE 10 YEARS The machine will produce10,000,000 units in its life.
2019 it produced 750,000 units
2020 its second year of service it produced $1,000,000.
Determine depreciation expense for 2019 and 2020 using.
- Straight line depreciation method
- Double declining balance method
- Units of productions method
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