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5. A machine was acquired on January 1, 2018, at a cost of $80,000. The...

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Accounting

5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine was originally estimated to have a residual value of $5,000 and an estimated life of 5 years. The machine is expected to produce a total of 100,000 components during its life, as follows: 15,000 in 2018, 20,000 in 2019, 20,000 in 2020, 30,000 in 2021, and 15,000 in 2022. (25 marks)

Instructions

(a) Calculate the amount of depreciation to be charged each year, using each of the following methods (22 marks):

1. Straight-line method

2. Units-of-production

3. Double diminishing-balance

(b) Which method results in the highest depreciation expense during the first two years? Over all five years? (3 marks)

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