Macon Assembly Company Purchased a Machine on January 2, 20X3

question 65

Essay

Macon Assembly Company purchased a machine on January 2, 20X3, by paying cash of $85,000. The machine has an estimated useful life of five years (or the production of 200,000 units) and an estimated residual value of $5,000. Required:
1. Determine depreciation expense (to the nearest dollar) for each year of the machine's useful life under (a). straight-line depreciation; and (b). the declining-balance method with a 200% acceleration rate.
2. What is the book value of the machine after three years with the declining-balance method and a 200% acceleration rate?
3. What is the book value of the machinery after three years with straight-line depreciation.
4. If the machine was used to produce and sell 48,000 units in 20X3, what would the depreciation expense be under the units of production method?

---

Definitions:

Independent Variable

A variable thought to be the cause or predictor of changes in a dependent variable.

Regression Function

An equation in mathematics that illustrates how one or more variables that can vary independently affect a variable that depends on them.

Estimated Regression Line

A line calculated from regression analysis that represents the relationship between independent and dependent variables.

Sales

The exchange of a commodity for money; the action of selling something.