Straight-Line and Units-of-Production Methods

Assume that Sample Company purchased factory equipment on January 1, 2014, for $45,000. The equipment has an estimated life of five years and an estimated residual value of $4,500. Sample's accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset. Because the company is beginning a new production process, the equipment will be used to produce 10,000 units in 2014, but production subsequent to 2014 will increase by 10,000 units each year.

Required:

The- Select your answer -straight lineunits-of-productionItem 1method for calculating depreciation creates the same amount of depreciation each year compared to the- Select your answer -straight lineunits-of-productionItem 2method which follows the pattern of usage of the asset. The amount of straight line depreciation results in- Select your answer -an equal amount of $8100a different amount starting with $2700, then $5400, then $8100, $10800 and last year $13500Item 3each year and the amount of units-of-production depreciation results in- Select your answer -an equal amount of $8,100a different amount starting with $2700, then $5400, then $8100, $10800 and last year $13500Item 4which is reasonable given that usage- Select your answer -decreasesincreasesItem 5over the five years.