Chapter 3
Long-Term Assets
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d) Using the same purchase information and residual value at the beginning of the question,
assume that the company uses the units-of-production method. The asset can produce
one million units. Record of production: year 2013—300,000 units; year 2014—250,000;
year 2015—300,000 units; year 2016—100,000 units. Prepare a table showing the year,
the cost of the asset, the amount of depreciation expense each year, accumulated
depreciation to date and net book value. (Hint: Depreciate the cost of the asset minus its
residual value.)
Year
Cost of Long-Term
Asset
Depreciation
Expense
Accumulated
Depreciation
To Date
Net Book Value
Analysis
Since the double-declining balance method for depreciation allows charging higher
depreciation in the first few years, some business owners may want to use this method for all
assets. Is it appropriate to use this method for all assets?
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