Question

In: Accounting

Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1,...

Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1: Purchase price $ 91,000 Delivery cost $ 5,000 Installation charge $ 3,000 Estimated life 5 years Estimated units 160,000 Salvage estimate $ 3,000 During Year 1, the machine produced 56,000 units and during Year 2, it produced 58,000 units. Required Determine the amount of depreciation expense for Year 1 and Year 2 using each of the following methods:

Solutions

Expert Solution

Total Cost of Machine = 91000+5000+3000 = 99000

Depreciation expense per unit = (99000-3000)/160000 = 0.60

Year 1 Year 2
Depreciation expense 56000*.60 = 33600 58000*.60 = 34800

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