Reference no: EM132518229

BJN's Bagel Company purchased a brand new shiny bagel oven for $370,000. The oven was shipped from Europe at a cost of $45,000 and while importing it, BJN paid $7,000 in customs levies. The oven was secured to the building foundation at a cost of $20,000 and $8,000 was spent testing the oven for quality production. It is estimated that the machine will have a $50,000 salvage value at the end of its 4-year useful service life. The maximum estimated bagel production is 1,000,000 bagels: 400,000 in year one, 300,000 in year two, 200,000 in year three, and 100,000 in year four, respectively.

Instructions:

Question 1: Compute the total cost, then using the straight line and units of activity methods, show a schedule that shows the annual depreciation expense, annual accumulated depreciation, and net book value on the machine for each of the years in its 4-year life.