Reference no: EM131717382

Problem 1 - Cardine Company acquired and placed into use equipment on 2009 January 2, at a cash cost of $ 935,000. Transportation charges amounted to $ 7,500, and installation and testing costs totaled $ 55,000.

The equipment was estimated to have a useful life of nine years and a salvage value of $ 37,500 at the end of its life. It was further estimated that the equipment would be used in the production of 1,920,000 units of product during its life. During 20xx, 426,000 units of product were produced.

Compute the depreciation to the nearest dollar for the year ended December 31, using:

1. Straight-line method.

2. Units-of-production method.

3. Double-declining-balance method (use a fraction rather than a percentage).

Problem 2 - Goodrich Company purchased a machine on 2009 October 1 for $ 100,000. The machine has an estimated salvage value of $ 30,000 and an estimated useful life of eight years.

Compute to the nearest dollar the amount of depreciation Goodrich should record on the machine for the years ending 20×1 December 31, and 20×2, under each of the following methods:

1. Straight-line.

2. Double-declining-balance.