In: Accounting
Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, 2016 |
Purchase price | $ | 67,000 | |
Delivery cost | $ | 6,000 | |
Installation charge | $ | 3,000 | |
Estimated life | 5 | years | |
Estimated units | 144,000 | ||
Salvage estimate | $ | 4,000 | |
During 2016, the machine produced 40,000 units and during 2017, it produced 42,000 units. |
Required: |
a. |
Determine the amount of depreciation expense for 2016 and 2017 using straight-line method. |
b. |
Determine the amount of depreciation expense for 2016 and 2017 using double-declining-balance method. |
c |
Determine the amount of depreciation expense for 2016 and 2017 using units of production method. |
d. |
Determine the amount of depreciation expense for 2016 and 2017 using MACRS, assuming that the machine is classified as seven-year property. (Round your answers to the nearest dollar amount.) |
MACRS table: |
Year | 5-Year property,% | 7-Year property,% | ||||
1 | 20.00 | 14.29 | ||||
2 | 32.00 | 24.49 | ||||
3 | 19.20 | 17.49 | ||||
4 | 11.52 | 12.49 | ||||
5 | 11.52 | 8.93 | ||||
6 | 5.76 | 8.92 | ||||
7 | 8.93 | |||||
8 | 4.46 | |||||