Depreciation Calculations
Response to the following problem:
Denver Hardware Company has a giant paint mixer that cost $31,500 plus $400 to install. The estimated salvage value of the paint mixer at the end of its useful life in 15 years is estimated to be $1,900. Denver estimates that the machine can mix 850,000 cans of paint during its lifetime.
Compute the second full year's depreciation expense, using the following methods:
1. Straight-line.
2. Units-of-production, assuming that the machine mixes 51,000 cans of paint during the second year.