Question
On January 1, 2016, Bones Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last eight years and have a
On January 1, 2016, Bones Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last eight years and have a residual value of $4,000. During its eight-year life, the equipment is expected to produce 250,000 units of product. In 2016 and 2017, 42,000 and 76,000 units respectively were produced.
Required:
A. Compute depreciation for 2016 and 2017 and the book value of the spooler at December 31, 2016 and 2017, assuming the straight-line method is used.
B. Compute depreciation for 2016 and 2017 and the book value of the spooler at December 31, 2016 and 2017, assuming the double-declining-balance method is used.
C. Compute depreciation for 2016 and 2017 and the book value of the spooler at December 31, 2016 and 2017, assuming the sum-of-the-years'-digits method is used.
D. Compute depreciation for 2016 and 2017 and the book value of the spooler at December 31, 2016 and 2017, assuming the units-of-production is used.
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