On December 27, 2021, Wolcott Windows purchased a piece of equipment for $107,500. The estimated useful life of the equipment is either four years or 60,000 units, with a residual value of $10,500. The company has a December 31 fiscal year end and normally uses straight-line depreciation. Management is considering the merits of using the units-of-production or diminishing-balance method of depreciation instead of the straight-line method. The actual numbers of units produced by the equipment were 10,000 in 2022, 20,000 in 2023, and 29,000 in 2024. The equipment was sold on January 5, 2025, for $15,000. 

Instructions 

a. Calculate the depreciation for the equipment for 2022, 2023, and 2024 under (1) the straight-line method; (2) the diminishing-balance method, using a 40% rate; and (3) units-of-production. 

b. Calculate the gain or loss on the sale of the equipment under each of the three methods. 

c. Calculate the net expense amount (total depreciation expense +/– the loss or gain on sale) under each of the three depreciation methods. Comment on your results.