Question
Diamond Autobody purchased a new equipment. The new equipment cost $108,000 including installation. The company estimates the equipment will have a residual value of
Diamond Autobody purchased a new equipment. The new equipment cost $108,000 including installation. The company estimates the equipment will have a residual value of $27,000. Diamond Autobody also estimates it will use the equipment for four years or about 8,000 total hours. Actual use per year was as follows: Hours Year Used 1 3,000 2,000 34 Required: 1,600 2,400 1. Prepare a depreciation schedule for four years using the straight-line method. 2. Prepare a depreciation schedule for four years using the double-declining- balance method. (Hint: The asset will be depreciated in only two years.) 3. Prepare a depreciation schedule for four years using the activity-based method.
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