Chapter 3
Long-Term Assets
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d) Assume that the company uses the units-of-production method, and the machine can
produce 350,000 units. Record of production: 2014—20,000 units; 2015—60,000 units;
2016—70,000 units; 2017—100,000 units; 2018—100,000 units. Prepare a depreciation
schedule for the machine’s useful life using the following table. Compare the pattern of
depreciation expense resulting from three different depreciation methods in parts a), c)
and d).
Year
Cost of Long-Term
Asset
Depreciation
Expense
Accumulated
Depreciation To
Date
Net Book
Value
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AP-7B (
3
4
)
MNO Company purchased equipment worth $35,000 on January 1, 2016. The equipment
has an estimated five-year service life with no residual value. The company’s policy for
five-year assets is to use the double-declining-balance method for the first two years of the
asset’s life and then switch to the straight-line depreciation method. The company’s year-
end is December 31.
Required
a) Calculate the depreciation expense on December 31, 2018.
