00:01
A machine costing $213 ,200 with a four -year life and a salvage value of $18 ,000 is installed on january 1.
00:10
The factory manager estimates it will produce 488 ,000 units during its four -year useful life.
00:17
And they want us to compute depreciation for each year under each depreciation method.
00:24
With the two depreciation methods specifically you're referring to, being straight -line, and production -based.
00:40
The formula to calculate straight -length depreciation is you take the cost minus the salvage value and divide it by the useful life.
00:51
This would get me a depreciation per year of $48 ,800.
00:57
Production -based means we need to find the percent that they've produced out of the estimated production of units during the useful life.
01:05
That would mean for the first year, i'm taking this amount.
01:08
And finding out how much of a percent it takes from the total amount of estimated usage.
01:16
And then i would multiply that by the difference of the cost and the salvage value.
01:21
213, 200 minus the 18 ,000 they expect to recoup at the end...