Zentex Company purchased a carton fabrication unit for $990,000 on January 8, 2016. The machine's useful life

Question:

Zentex Company purchased a carton fabrication unit for $990,000 on January 8, 2016. The machine's useful life is estimated as 3,000,000 units of product or eight years and its salvage value is estimated at $90,000. The number of cartons fabricated in each year, 2016 to 2018, is as follows:

Year Cartons Fabricated

2016..................................320,000

2017..................................336,800

2018..................................472,000

INSTRUCTIONS

Compute the depreciation expense and accumulated depreciation at year-end for each of the three years under

(1) The straight-line method and

(2) The units-of-production method.

Analyze: If the units-of-output method were used, what would be the book value of the machine at the end of 2017?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...