Reference no: EM132712207

The Hartley Clinic purchased a new surgical laser for $90,000. The estimated salvage value is $5,000. The laser has a useful life of five years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,200 hours in year 2; 2,400 hours in year 3; 1,800 hours in year 4; 2,000 hours in year 5.

Instructions

Problem (a) Compute the annual depreciation for each of the five years under each of the following methods:

(1) straight-line.

(2) units-of-activity.

Problem (b) If you were the administrator of the clinic, which method would you deem as most appropriate? Justify your answer.

Problem C. How is a gain or loss on the sale of a plant asset computed?