PEI Productions Ltd. purchased equipment on February 1, 2018, for $50,000. The company estimated the equipment would have a useful life of three years and would produce 10,000 units, with a residual value of $10,000. During 2018, the equipment produced 4,000 units. On October 31, 2019, the machine was sold for $12,000; it had produced 5,000 units that year.
Instructions
(a) Record all the necessary entries for the years ended December 31, 2018 and 2019, for the following depreciation methods:
(1) Straight-line,
(2) Double-diminishing-balance, and
(3) Units-of-production.
(b) Complete the following schedule for each method of depreciation and compare the total expense over the two-year period.

Transcribed Image Text:

Straight- Double-Diminishing-Units-of- Line Balance production Depreciation expense 2018 2019 Total depreciation expense for two years +Loss (or -gain) on disposal = Net expense for two years