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.)

Each method has a different formula. In the straight-line depreciation, each year's depreciation expense is the same. On the other hand, double-declining balance depreciation expense declines with the years. While the units of production method, depreciation expense varies according to use.

A) Straight-line:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (120,000 - 5,000)/4= $28,750 per year

B) Double declining balance:

Annual depreciation= 2*[(book value)/estimated life (years)]

Year 1= 2*(115,000/4)= 57,500

Year 2= 2*[(115,000 - 57,500)/4]= 28,750

Year 3= 2*[(57,500 - 28,750)/4]= 14,375

Year 4= 2*[(28,750 - 14,375)/4]= 7,187.5

C) Units of production:

Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units produced

Year 1= [(115,000)/920,000]*200,000= $25,000

Year 2= (0.125)*350,000= 43,750

Year 3= 0.125*260,000= $32,500

Year 4= 0.125*110,000= $13,750

andromache andromache · Answer 2 · 2022-03-03T13:33:54+01:00

The calculation of the depreciation expense for each year under straight line, double-declining, and the unit of production is shown below:

Calculation of depreciation:

1. Under Straight-line method:

We know that

Annual depreciation= (original cost - salvage value)/ usefule life

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

= $28,750 per year

This depreciation expense should be the same for all years.

2. Under Double declining balance:

We know that

Annual depreciation= 2*[(book value)/estimated life (years)]

For Year 1

= 2*(115,000/4)

= 57,500

For Year 2

= 2*[(115,000 - 57,500)/4]

= 28,750

For Year 3

= 2*[(57,500 - 28,750)/4]

= 14,375

For Year 4

= 2*[(28,750 - 14,375)/4]

= 7,187.5

3. Under Units of production:

We know that

Annual depreciation= [(original cost - salvage value)/useful life of units]*units produced

For Year 1

= [(115,000)/920,000]*200,000

= $25,000

For Year 2

= (0.125)*350,000

= 43,750

For Year 3

= 0.125*260,000

= $32,500

For Year 4

= 0.125*110,000

= $13,750

Learn more about depreciation here: https://brainly.com/question/24320045