Ashish purchased a photocopier that cost $11 000 on 1 May 2021. This equipment was expected to remain in service for five years and to perform a total of 50 000 photocopies. At the end of this equipments useful life, Ashish estimates that its residual value will be $1 000. The equipment is expected to perform 8 000 photocopies in the first year, 13 000 photocopies in the second year, 14 000 photocopies in the third year, 10 000 photocopies in the fourth year, and 5 000 photocopies in the fifth year.

Assessment Tasks:

Based on the above details, calculate;

1. The depreciation expense for the equipment for the first year (1 May 2022) and the second year (1 May 2023), and
2. The carrying amount/book value of the equipment at the end of the second year (1 May 2023) for;

1. Straight-line method. ( + = 1 Mark)

2. Units of production method. (1 + = 2 Marks)

3. Reducing balance method, precise depreciation rate is 40%. (1 + 1 = 2 Marks)

4. Which method would you recommend to Ashish to track the wear and tear on the equipment most closely? (1 Mark)