On 1st January 2014 Special Ltd acquired a wood lathe for $31 500 which included shipping charges of $500. The lathe has an estimate useful life of 5years (30000 machine hours of operation) and a residual value of $3000. Insurance on the lathe while in transit was $150 insurance against damage for 1 year amounted to $250. Finally installation costs were $1000 and test runs before commissioning totalled $350. During the first year of operations the machine was operated for 6200 hours.
Calculate the cost of the lathe
Calculate the depreciation for the year ending 31 December 2014 using each of the following methods:
Units of production