Lyman Construction purchased a concrete mixer on July 15, 2008. Company officials revealed the following information regarding

Question:

Lyman Construction purchased a concrete mixer on July 15, 2008. Company officials revealed the following information regarding this asset and its acquisition:

Purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $175,000
Residual value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000
Estimated useful life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 years
Estimated service hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Estimated production in units . . . . . . . . . . . . . . . . . . . . . . . . 350,000 yards

The concrete mixer was operated by construction crews in 2008 for a total of 4,500 hours, and it produced 41,000 yards of concrete.
It is company policy to take a half-year’s depreciation on all assets for which it used the straight-line or double-declining-balance depreciation method in the year of purchase.
Calculate the resulting depreciation expense for 2008 under each of the following methods, and specify which method allows the greatest depreciation expense.
1. Double-declining-balance
2. Productive-output
3. Service-hours
4. Straight-line

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0324312140

16th Edition

Authors: James D. Stice, Earl K. Stice, Fred Skousen

Question Posted: