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Diamond Autobody purchased a new equipment. The new equipment cost $110,000 including installation. The company estimates the equipment will have a residual value of $27,500.

Diamond Autobody purchased a new equipment. The new equipment cost $110,000 including installation. The company estimates the equipment will have a residual value of $27,500. 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:

Year Hours Used
1 2,000
2 1,600
3 2,000
4 3,200

Required:

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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