Question
On January 3, 2017 PQR Corporation purchased equipment costing for $245,000. The estimated life of the equipment is 6 years or 40,000 hours and estimated
On January 3, 2017 PQR Corporation purchased equipment costing for $245,000. The estimated life of the equipment is 6 years or 40,000 hours and estimated residual value is $5,000.
Required:
a. Calculate the depreciation expense for the equipment using the straight-line method. What will be the balance in the accumulated depreciation account for the equipment on December 31, 2018. (6 marks)
b. Calculate the depreciation expense for the equipment for 2017 and 2018 using the double diminishing balance method. (8 marks)
c. The machine was used for 8,000 hours in 2017. Calculate the depreciation expense for the equipment for 2017 using the units-of-production method. (6 marks)
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