Reference no: EM13492370

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.

Method:                                                        Depreciation             Accumulated                        Net Year Computation           Expense                    Depreciation                Book value

At acquisition            1            2