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Chevrette Corporation purchased equipment on January 1, 2014 for $87,000. It is estimated that the equipment will have a $7,000 residual value at the end of its 8-year useful life. It is also estimated that the equipment will produce 160,000 units over its 8-year life. Instructions
Problem (a) Using straight-line depreciation, calculate the depreciation expense for the year ended December 31, 2014.
Problem (b) Now assume Chevrette uses the units-of-production depreciation. If 16,000 units of product are produced in 2014 and 24,000 units are produced in 2015, what is the carrying amount of the equipment at December 31, 2015?
Problem (c) Now assume Chevrette uses double diminishing-balance depreciation. What is the balance of the Accumulated Depreciation-Equipment account at December 31, 2016? Round amounts to the nearest dollar.
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