Straight-Line and Units-of-Production Methods

Assume that Sample Company purchased factory equipment on January 1, 2017, for $30,000. The equipment has an estimated life of five years and an estimated residual value of $3,000. 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 2017, but production subsequent to 2017 will increase by 10,000 units each year.

Required:

1. Calculate the depreciation expense, accumulated depreciation, and book value of the equipment under both methods for each of the five years of its life. Enter all amounts as positive values.

Straight-line method:

	Annual	Accumulated	Book
Year	Depreciation	Depreciation	Value
2017	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
2018	fill in the blank 4	fill in the blank 5	fill in the blank 6
2019	fill in the blank 7	fill in the blank 8	fill in the blank 9
2020	fill in the blank 10	fill in the blank 11	fill in the blank 12
2021	fill in the blank 13	fill in the blank 14	fill in the blank 15

Units-of-production method:

	Annual	Accumulated	Book
Year	Depreciation	Depreciation	Value
2017	$fill in the blank 16	$fill in the blank 17	$fill in the blank 18
2018	fill in the blank 19	fill in the blank 20	fill in the blank 21
2019	fill in the blank 22	fill in the blank 23	fill in the blank 24
2020	fill in the blank 25	fill in the blank 26	fill in the blank 27
2021	fill in the blank 28	fill in the blank 29	fill in the blank 30

2. In this exercise, The units of production method results in a depreciation pattern opposite to which depreciation method?

Straight-line methodMACRS methodAccelerated depreciation methodNone of the aboveAccelerated depreciation method

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