E9.5 (LO 2) AP On April 22, 2020, Sandstone Enterprises purchased equipment for $129,200. The company expects to use the equipment for 12,000 working hours during its four-year life and that it will have

a residual value of $14,000. Sandstone has a December 31 year end and pro-rates depreciation to the

nearest month. The actual machine usage was: 1,900 hours in 2020; 2,800 hours in 2021; 3,700 hours in

2022; 2,700 hours in 2023; and 1,100 hours in 2024.

Instructions

a. Prepare a depreciation schedule for the life of the asset under each of the following methods:

1. straight-line,

2. double diminishing-balance, and

3. units-of-production.

b. Which method results in the lowest profi t over the life of the asset?

c. Which method results in the least cash used for depreciation over the life of the asset?