Reference no: EM132862708

On January 1, 2020, Harvard Manufacturing Company (HMC) acquired new equipment that is used to make several new lines of products. One of the bank's conditions for providing financing for the new equipment is that the bank requires HMC's total net book value of assets must exceed $700,000, as reported on its December 31 balance sheet. Before making the adjustment for this year's depreciation, HMC reported total net book value of assets at $800,000 on their balance sheet as at December 31, 2019. A depreciation method has yet not been adopted for the new equipment. The cost of the new equipment was $440,000 and it is estimated it will be worth $40,000 at the end of its five-year useful life. HMC used the equipment to produce and sell 48,000 units this year. HMC anticipates that the equipment will remain quite productive throughout its entire five-year life, producing a total of 160,000 units over that entire period.

Question 1. Calculate the depreciation that would be reported for the year ended December 31, 2020