Ray Corporation purchased a concrete mixer on July 15, 2016. Company officials revealed the following information regarding this asset and its acquisition: Purchase price
Ray Corporation purchased a concrete mixer on July 15, 2016. Company officials revealed the following information regarding this asset and its acquisition: Purchase price Residual value Estimated useful life Estimated service hours Estimated production in units D $ 125,000 $ 18,000 10 years 38,000 500,000 yards The concrete mixer was operated by construction crews in 2016 & 2017 for a toal of 5,225 hours & 6,240 hours; and it produced 77,000 yards and 125,000 yards of concrete respectively. It is company policy to take a half-year depreciation on all assets for which it used the straight-line or double declining-balance depreciation method in the year of purchase. Required: Calculate the resulting depreciation expense for 2016 & 2017 under each of the following methods and specify which methods allows the greatest depreciaton expense for each year. 1. Double-declining balance 2. Productive-output 3. Service-hours 4. Straight-line
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