Question
A. PROBLEM 2: Compare the three depreciation methods: Objective: Determine depreciation expense using straight line, units-of-production method, and double declining balance. Empresas La Tormenta purchased
A. PROBLEM 2: Compare the three depreciation methods:
Objective: Determine depreciation expense using straight line, units-of-production method, and double declining balance.
Empresas La Tormenta purchased equipment on January 2, 2017 for $ 100,000. The equipment is expected to have a useful life of 3 years, or 23,000 hours of operation, residual value of $ 7,500. The equipment was used for 9,000 hours during 2017, 7,200 hours in 2018 and 6,800 hours in 2019.
Required: I Determine the amount of depreciation expense for the years ending December 31, 2017, 2018, and 2019 using:
a) Straight-line method
b) Units of production (Units-of-production method)
c) Double decling balance
II Which method presents the highest depreciation for the year 2017?
III Which method shows more depreciation for the three years of the equipment's life?
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