Evaluating the effect of alternative depreciation methods on key ratios form analyst perspective
You are a financial analyst for General Motors and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a machine that cost $93,000. The estimated useful life is 13 years, and the estimatedresidualvalue is $2,000. The machine has an estimated useful life in productive output of 182,000 units.Actual output was 20,000 in year 1 and 16,000 in year 2. (Round results to the nearest dollar.)
Required:
1. For years 1 and 2 only, prepare separate depreciation schedules assuming:
a. Straight-line method.
b. Units-of-production method.
c. Double-declining-balance method.
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Method:
Depreciation Accumulated Net
Year Computation Expense Depreciation Book value
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At acquisition
1
2
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