Duluth Ranch,Inc

question 107

Essay

Duluth Ranch,Inc.purchased a machine on January 1,2018.The cost of the machine was $34,000.Its estimated residual value was $10,000 at the end of an estimated 5-year life.The company expects to produce a total of 20,000 units.The company produced 2,500 units in 2018 and 3,200 units in 2019.
Required:
Part a.Calculate depreciation expense for 2018 and 2019 using the straight-line method.
Part b.Calculate the depreciation expense for 2018 and 2019 using the units-of-production method.
Part c.Calculate depreciation expense for 2018 through 2022 using the double-declining balance method.

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Definitions:

Joint Costs

Expenses incurred in the process of producing two or more products at the same time, which cannot be easily attributed to individual products.

Split-off Point

The stage in a production process where multiple products become separately identifiable, often leading to different processing streams.

Value Basis

Value Basis refers to the method or groundwork for assessing the worth or value of assets, often used for tax or financial reporting purposes.

Joint Cost Allocation

The process of distributing the costs of producing two or more products from the same process where those costs cannot be directly assigned to each product.