On January 1, 2016, SugarBear Company acquired equipment costing $150,000, which will be depreciated on the assumption that the equipment will be useful for five years and have a residual value of $12,000. The estimated output from this equipment is as follows: 201615,000 units; 201724,000 units; 201830,000 units; 201928,000 units; 202018,000 units. The company is now considering possible methods of depreciation for this asset.

Problem:

a. Calculate what the depreciation expense would be for each year of the asset's life, if the company chooses:

i.The straight-line method

ii.The units-of-production method

iii.The double-diminishing-balance method

b.

Briefly discuss the criteria that a company should consider when selecting a depreciation method.