NOTE: Although this problem is different from that found in the text, you may use the working papers designed for Problem 8-5B in solving this problem.

Part 1. On January 2, Brodie Company purchases and installs a new machine costing $405,000 with a five-year life and an estimated $45,000 salvage value. Management estimates the machine will produce 1,800,000 units of product during its life. Actual production of units is as follows: year 1, 325,000; year 2: 367,000; year 3, 385,000; year 4, 354,000; year 5, 369,000.

Required:

Prepare a table with the following column headings and compare depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method.

Year	Straight-Line	Units-of-Production	Double-Declining-Balance

Part 2. On January 1, Trek purchases a used machine for $187,500 and readies it for use the next day at a cost of $4,400. On January 4, it is mounted on a new platform costing $5,750, and it began operating. Management estimates the machine will be used for 7 years and have a $22,650 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its 6th year of use, the machine is disposed of.

Required:

1. Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.

2. Prepare journal entries to record depreciation of the machine at December 31 of its first year in operations and at December 31 in the year of its disposal.

3. Prepare journal entries to record the machine's disposal under each of the following separate assumptions: (i) it is sold for $35,000 cash; (ii) it is sold for $65,000 cash; and (iii) it is destroyed in a fire and the insurance company pays $31,250 cash to settle the loss claim.