Baseball Company purchased a new pitching machine at a cost of $18,000 at the
beginning of January 2003. The machine was estimated to have a salvage value of
$2,000 at the end of its useful life of 4 years. A machine like this is supposed to
deliver 160,000 hours of pitching practice. The actual numbers of hours that the
machine was used per year were 2003 – 40,000 hours; 2004 – 60,000 hours; 2005 –
35,000 hours; and 2006 – 25,000 hours.
Required:
Prepare a depreciation schedule using the
1. straight-line method.
2. activity method.
3. double-declining method.
For each, make a chart that shows the depreciation expense for each year, as well as
the book value of the asset at the end of the year.