Depreciation Methods On January 2, 2018, Skyler, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life was four years or 920,000 cuttings, after which it could be sold for $5,000. Required a. Calculate each year's depreciation expense for the machine's useful life under each of the following depreciation methods (round all answers to the nearest dollar): 1. Straight-line. 2. Double-declining balance. 3. Units-of-production. (Assume annual production in cuttings of 200,000; 350,000; 260,000; and 110,000.) b. Assume that the machine was purchased on July 1, 2018. Calculate each year's depreciation expense for the machine's useful life under each of the following depreciation methods: 1. Straight-line. 2. Double-declining balance.

Part A  

1. Straight-line.    

Year   Depreciation expenses ($)  

2018  228,750  

2019  228,750  

2020  228,750  

2021  228,750  

2. Double-declining balance.  

Year   Depreciation expenses ($)  

2018  460,000  

2019  230,000  

2020  115,000  

2021  110,000  

3. Units-of-production. (Assume annual production in cuttings of 200,000; 350,000; 260,000; and 110,000.)    

Year   Depreciation expenses ($)  

2018  198,913  

2019  348,098  

2020  258,587  

2021  109,402  

Part B  

1. Straight-line.    

Year   Depreciation expenses ($)  

2018  114,375  

2019  228,750  

2020  228,750  

2021  228,750  

2022  114,375  

2. Double-declining balance.  

Year   Depreciation expenses ($)  

2018  230,000  

2019  345,000  

2020  172,500  

2021  86,250  

2022  81,250  

3. Units-of-production. (Assume annual production in cuttings of 200,000; 350,000; 260,000; and 110,000.)    

Year   Depreciation expenses ($)  

2018  99,457  

2019  273,505  

2020  303,342  

2021  183,995  

2022  54,701  

Explanation:

Note: See the calculation in the attached excel file.

see explanation below for answers.

Explanation:

Given:

Cost of machine = $120,000

Estimated useful life = 4 years

Estimated cuttings = 920,000

Salvage value = $5,000

Straight-line depreciation:

(Cost of machine - salvage value)/useful life

Year 1 depreciation

= (120,000 - 5,000)/4

= 115,000/4

= $28,750

Year 2 depreciation

91,250 - 28,750 = $62,500

Year 3 depreciation

62,500 - 28,750 = $33,750

Year 4 depreciation

33,750 - 28,750 = $5,000

Double declining balance depreciation:

Double-declining balance formula = 2 X Cost of the asset X Depreciation rate

First, we calculate the depreciation rate thus:

1/useful life X 100 = 1/4 X 100

25%

We have:

First year depreciation:

2 X 120,000 X 25% = $60,000

Second year depreciation:

60,000 X 50% = $30,000

Third year depreciation:

30,000 X 50% = $15,000

Fourth year depreciation:

15,000 X 50% = $7,500

Units-of-production depreciation:

DE = [(Original Value − Salvage Value)/Estimated Production Capability] X U

where:

First year depreciation:

DE=Depreciation Expense

U=Units per year

= [(120,000 - 5,000)/920,000] X 200,000

= [115,000/920,000] X 200,000

= 0.125 X 200,000 = $25,000

Second year depreciation:

= [(95,000 - 5,000)/920,000] X 350,000

= [90,000/920,000] X 350,000

= 0.098 X 350,000 = $34,300

Third year depreciation:

= [(60,700 - 5,000)/920,000] X 260,000

= [55,700/920,000] X 260,000

= 0.06 X 260,000 = $15,600

Fourth year depreciation:

= [(45,100 - 5,000)/920,000] X 110,000

= [40,100/920,000] X 110,000

= 0.04 X 110,000 = $4,400

Now we assume the machine was bought on July 1, 2018

Straight line depreciation:

First half-year depreciation

= $28,750/2 = $14,375

Second year depreciation

= 105,625 - 28,750 = $76,875

Third year depreciation

= 76,875 - 28,750 = $48,125

Fourth year depreciation

= 48,125 - 28,750 = $19,375

For the first half of the fifth year

= 19,375 - 14,375 = $5,000

Double declining balance depreciation:

First year depreciation

60,000/2 = $30,000

Second year depreciation

90,000 X 50% = $45,000

Third year depreciation

45,000 X 50% = $22,500

Fourth year depreciation

22,500 X 50% = $11,250

match each type of restriction with one of its effects.

a. land-use laws

b. labor laws

c. banking regulations

a. controlled development of towns and cities

b. protection of young workers

c. greater financial stability

an important city to the south and the region's capital is c. kiev