Acquisition and Depreciation of Assets Brough Oil Company, which prepares financial statements on a calendar-year basis, purchased new drilling equipment on July 1, 2009. A breakdown of the cost follows:

Assuming that the estimated life of the drilling equipment is 20 years and its salvage value is $10,000:
1. Record the purchase on July 1, 2009.
2. Assume that the drilling equipment was recorded at a total cost of $140,000. Calculate the depreciation expense for 2009 using the following methods:

a. Sum-of-the-years’-digits.

b. Double-declining-balance.

c. 150% declining-balance.
3. Prepare the journal entry to record the depreciation for 2009 in accordance with part (2)a.

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Cost of drilling equipment Cost of cement platform. $125,000 35,000 Installation charges 22,000 Freight costs for drilling equipment Total 3,000 $185,000