Wollongong Constructions Ltd purchased new building equipment on 1 January 2022, at a cost of $442,500. The accountant estimated the building equipment would have a useful life of 5 years and a residual value of $25,000.

Required

a) Calculate the amount of depreciation expense for the years ending 30 June 2022 and 30 June 2023, using the following methods:

1. Straight-line.
2. Diminishing balance.

b) Discuss how the units of production method for depreciation differs from the straight line and diminishing balance methods.