On January 5, 2019, Williams Company purchased equipment for $310,000 that had an estimated useful life of

Question:

On January 5, 2019, Williams Company purchased equipment for $310,000 that had an estimated useful life of five years or 147,500 units of product. The estimated salvage value was $15,000. Actual production data for the first three years were: 2019—25,000 units; 2020—33,000 units; and 2021—28,000 units.

INSTRUCTIONS
Compute each year’s depreciation and the end-of-year accumulated depreciation under (1) the straight-line method and (2) the units-of-output method.
Analyze: Would the total depreciation taken over the five-year life depend on which of the two methods is used? Why?

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...

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