Straight-line and units-of-production methods

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Reference no: EM133147765

Straight-Line and Units-of-Production Methods

Assume that Sample Company purchased factory equipment on January 1, 2016, for $45,000. The equipment has an estimated life of five years and an estimated residual value of $4,500. 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 2016, but production subsequent to 2016 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

 

2016

$fill in the blank 1   

$fill in the blank 2   

$fill in the blank 3   

2017

fill in the blank 4   

fill in the blank 5   

fill in the blank 6   

2018

fill in the blank 7   

fill in the blank 8   

fill in the blank 9   

2019

fill in the blank 10   

fill in the blank 11   

fill in the blank 12   

2020

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

 

2016

$fill in the blank 16   

$fill in the blank 17   

$fill in the blank 18   

2017

fill in the blank 19   

fill in the blank 20   

fill in the blank 21   

2018

fill in the blank 22   

fill in the blank 23   

fill in the blank 24   

2019

fill in the blank 25   

fill in the blank 26   

fill in the blank 27   

2

 

 

 

Reference no: EM133147765

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