Curtis, Inc., a firm that makes oversized boots, purchased a machine for its factory. The following data relate to the machine:
|
Price |
$16,000 |
|
Delivery charges. |
$200 |
|
Installation charges. |
$600 |
|
Date purchased. . |
1 May 02 |
|
Estimated useful life: |
8 years |
|
In years |
30,000 hours of |
|
In hours of production. |
operating time |
|
Salvage value |
$1,800 |
During 2002, the machine was used 4,400 hours. During 2003, the machine was used 3,200 hours.
Determine the depreciation expense and the year end book values for the machine for the years 2002 and 2003, assuming that:
1. The straight line method is used.
2. The double declining balance method is used.
3. The units of production method is used.
4. The sum of the years digits method is used.
5. Interpretive Question: If you were Curtis, which method would you use in order to report the highest profits in 2002 and 2003 combined?