Mack Company purchased equipment for $2,300,000 on April 1, 2011. It is estimated that the equipment will have a useful life of 10 years and a salvage value of $120,000. Estimated production is 75,000 units and estimated working hours are 40,000. During 2011, Mack Company uses the equipment for 1050 hours and the equipment produces 2500 units.
Instructions
Compute depreciation expense under each of the following methods. Mack is on a calendar-year basis ending December 31. (Show your work & formulas)
a. Straight-line method for 2011 & 2012
b. Activity method (units of output) for 2011
c. Activity method (working hours) for 2011
d. Double-declining-balance method for 2011, 2012, and 2013