Dawayne Wade Company purchased equipment for $212,000 on October 1, 2008. It is estimated that the equipment

Question:

Dawayne Wade Company purchased equipment for $212,000 on October 1, 2008. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours 20,000.

During 2008, Wade uses the equipment for 525 hours and the equipment produces 1,000 units.

Instructions

Compute depreciation expense under each of the following methods. Wade is on a calendar-year basis ending December 31. (Round to nearest dollar.)

(a) Straight-line method for 2008.

(b) Activity method (units of output) for 2008.

(d) Sum-of-the-years’-digits method for 2010.

(e) Double-declining balance method for 2009.

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...