Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Correct my answer thanks Straight-Line and Units-of-Production Methods Assume that Sample Company purchased factory equipment on January 1, 2016, for $85,000. The equipment has an

Correct my answer thanks

Straight-Line and Units-of-Production Methods

Assume that Sample Company purchased factory equipment on January 1, 2016, for $85,000. The equipment has an estimated life of five years and an estimated residual value of $8,500. Sample's accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset. Because the company is beginning a new production process, the equipment will be used to produce 10,000 units in 2016, but production subsequent to 2016 will increase by 10,000 units each year.

Required:

1. Calculate the depreciation expense, accumulated depreciation, and book value of the equipment under both methods for each of the five years of its life. Enter all amounts as positive values.

image text in transcribed

Straight-line method: Annual Year Depreciation 2016 $85,000 X 201769 2018 2019 2020 Units-of-production method: Accumulated Depreciation 15,300 V 15,300X 15,300X 15,300X 15,300X Book Value 15,300X 30,600X 45,900X 61,200X 76,500X 69,700X 54,400X 39,100X 23,800X Annual Year Depreciation 2016 2017 10,200V 2018 15,300 2019 20,400 2020 25,500 2. In this exercise, The units of production method results in a depreciation pattern opposite to which depreciation Accumulated Depreciation 5,100 | 15,300 V 30,600 V Book Value 85,000X 79,900X 69,700X 54,400X 28,900X 5,100 | 51,000 76,500 V method? Accelerated depreciation method ??Windows

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

General Purpose of Your Speech Analyzing Your Audience

Answered: 1 week ago

Question

Ethical Speaking: Taking Responsibility for Your Speech?

Answered: 1 week ago