Wildhorse Co. purchased equipment on March 31, 2021, at a cost of $292,000. Management is considering the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $4,000 and an estimated useful life of either four years or 80,000 units. Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,200 units in 2021; 20,200 units in 2022; 20,600 units in 2023; 20,000 units in 2024; and 5,000 units in 2025. Wildhorse has a December 31 year end.

(a)

• Your Answer
• Correct Answer

Partially correct answer iconYour answer is partially correct.

Prepare separate depreciation schedules for the life of the equipment using: (Round depreciation per unit to 2 decimal places, e.g. 5.28 and final answers to 0 decimal places, e.g. 5,275.) Straight-line method:

Year	Depreciable Amount	Depreciation Expense	Accumulated Depreciation	Carrying Amount
				$enter a dollar amount
2021	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount	enter a dollar amount
2022	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2023	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2024	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2025	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount

Double-diminishing-balance method:

Year	Opening Carrying Amount	Depreciation Expense	Accumulated Depreciation	Carrying Amount
				$enter a dollar amount
2021	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount	enter a dollar amount
2022	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2023	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2024	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2025	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount

Units-of-production method:

Year	Units-of-Production	Depreciation Expense	Accumulated Depreciation	Carrying Amount
				$enter a dollar amount
2021	enter a dollar amount	$enter a dollar amount	$enter a dollar amount	enter a dollar amount
2022	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2023	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2024	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
2025	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount

eTextbook and Media

Solution

Attempts: 3 of 3 used

(b)

Compare the total depreciation expense and accumulated depreciation under each of the three methods over the life of the equipment. (Round answers to 0 decimal places, e.g. 5,275.)

		Straight-Line		Units-of-Production		Double-Diminishing-Balance
Total depreciation expense		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Accumulated depreciation		enter a dollar amount		enter a dollar amount		enter a dollar amount