On January 1, Year 1, Scott Company purchased a new machine for $220,000. The machine is expected to have an eight-year life and a $20,000 salvage value. The machine is expected to produce 800,000 finished products during its eight-year life. Production during Year 1 was 70,000 units and during Year 2 was 110,000 units.Required: Determine the amount of depreciation expense to be recorded on the machine for Year 1 and Year 2, respectively, using each of the following methods:1) Straight-line2) Units-of-production3) Double-declining-balance
What will be an ideal response?
1) $25,000 and $25,000
2) $17,500 and $27,500
3) $55,000 and $41,250
| ? | ? | Year 1 | Year 2 |
| Straight-line | ($220,000 - $20,000)/8 years | $25,000 | $25,000 |
| Units-of-production | ($220,000 - $20,000)/800,000 × 70,000 | 17,500 | ? |
| Units-of-production | ($220,000 - $20,000)/800,000 × 110,000 | ? | 27,500 |
| Double-declining- balance | $220,000 × (2 × 12.5%) | 55,000 | ? |
| Double-declining- balance | ($220,000 - $55,000) × (2 × 12.5%) | ? | 41,250 |
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