A company purchased equipment for $325,000 on January 2, 2010. The company expects the equipment to last

Question:

A company purchased equipment for $325,000 on January 2, 2010. The company expects the equipment to last for ten years or 80,000 hours of operation, with an estimated salvage value of $10,000. During 2010, the equipment was in operation for 8,000 hours. In 2011 the equipment was in operation for 6,000 hours.

Requirements

Compute the depreciation expense relating to the equipment for 2010 and 2011 using the following depreciation methods:

a. Straight-line

b. Double-declining-balance

c. Units-of-production

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...