[ivory5130]

can someone please tell me what I am doing wrong. I've done each depreciation method according to the book but my totals are not totalling up correctly. I will type the assignment and then type what I did so far.

part 1
a machine costing 210,000 with a four year life and an estimated 20000 salvage value is installed in calhoon company's factory on jan 1. the factory manager estimates the machine will product 475,000 units of product during it's life. It actually produces the following units: year 1, 121,400; year 2, 122.400; year 3, 119,600; and year 4, 118,200. The total number of units produced by the end of year 4 exceeds the original estimate- this difference was not predicted.( The machine must not be depreciated below it's estimated salvage value.)

prepare a table with the following column headings and compute depreciation for each year(and total depreciation of all yers combined) for the machine under each depreciation method).:confused:


year straight-line units of production double declining bal.

[ivory5130]

continuation-ran out of space.

year straight line units of production double declining balance

1 47,500 48,560 95,000
2 47,500 48,960 47,500
3 47,500 47,840 23,750
4 47,500 47,280 11,875


these rows should total and they do not. What did I do wrong? I calculated my units of production like this

210,000 -20,000/475,000= 190,000/475,000=.4 per shoe

.4x121,400 shoes =48,560 depreciation


straight line method

210,000-20,000/4 years= 190,000/4=47,500

double decling method
straight line rate=100% / useful life 100%/4=25
2x straight line rate 2*25%=50%
50% * 190,000= 95,000:confused:

[CaptainForest]

Year – straight-line – units of production – double declining bal.
1 – 47,500 – 48,560 – 105,000
2 – 47,500 – 48,960 – 52,500
3 – 47,500 – 47,840 – 26,250
4 – 47,500 – 44,640 – 6,250
Total = 190,000 – 190,000 – 190,000

Units of Production Calculation:
We are to assume that 475,000 units will be produced.

Therefore, Year 1 is: 121,400 / 475,000 x 190,000 = 48,560
Therefore, Year 2 is: 122,400 / 475,000 x 190,000 = 48,960
Therefore, Year 3 is: 119,600/ 475,000 x 190,000 = 47,840

Therefore, Year 4 is: 118,200 / 475,000 x 190,000 = 47,280. However, that would bring the total depreciation to 192,640 and you have a cap at 190,000. Therefore, depreciation in Year 4 will be capped at: 44,640

Double declining balance Calculation:
Year 1: 47,500 / 190,000 = 25%. Therefore Rate at 50% [ or 1/4x100 = 25% x 2 = 50%]
Year 1: 210,000 x 50% = 105,000 (we multiple DDB rate against cost of asset, regardless of salvage value)

Year 2: 210,000– 105,000 = 105,000 x 50% = 52,500

Year 3: 105,000 – 52,500 = 52,500 x 50% = 26,250

Year 4: 52,500 – 26,250 = 26,250 x 50% = 13,125. However, after 3 Years, we have total accumulated depreciation of 183,750 and with a cap of 190,000, leaves us with only enough room to depreciate up to 6,250. Therefore, Year 4 Depreciation will be 6,250

[ivory5130]

It doesn't look like I was that far off. I'm going to go over this and give you a write back if necessary, thanks for your help.

[ivory5130]

Okay, I see the errors in my ways. Stupid, stupid errors at that. I have another question for you about part 2. assignment- calhoun purchases a used machine for 167,000 cash on 1/02 and readies it for use the next day at 3420 cost. On jan. 3, it is installed on a required operating platform costing 1080 and it is readied for operations. The company predicts the machine will be used for sic years and have a 14,600 salvage value. Depreciation is to be charged on a straight line basis. On dec 31, at the end of it's fifth year in operations, it is disposed of. Okay, my book talks about disposal but what is readies it for use? That is not within my book. So how do I go getting started with this?

[CaptainForest]

Readies for use? All that means is extra costs associated with getting the asset ready to use.

Let me give you an example.

You go and buy a computer and pay $1,000 cash for it. Now you bring the computer back to your office, but you have to install software on it, plug it in, set it up, and do a bunch of things to it before you can actually use the computer to perform the necessary function that your business requires it for.

Now, setting up a computer is easy, but let's say you don't know how. So you have to hire someone, perhaps you pay them $200 to set it up.

How much should the computer be on your books? You will record it at 1,200. While you paid 1,000 to get it, you needed to pay another 200 to make it ready for your use.

[ivory5130]

So what you are saying is that the total cost of my machine is 171,500? Which comes from 167,000 the machine purchase, the 3420 to ready it and the 1080 to mount it on the platform.

[CaptainForest]

Yep, a cost of 171,500 with a salvage value of 14,600

[t rose]

The Talco Enterprises bought a machine costing $60,000. The estimated useful life of the
Machine is eight years. The method of depreciation used in the first four years was the Straight
Line Method, after which the Reducing Balance Method was applied at the rate of ~O% pel,
Annum. Determine the depreciation expense to be charged to Talco's Profit and Loss Account in
Each of the eight years of the machine's useful life and give the residual value of the machine
After the eight years.
Help please