Scott Company purchased equipment for $250,000 on October 1, 2014. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $50,000. Estimated production is 20,000 units and estimated working hours 10,000. During 2014 Scott uses the equipment for 900 hours, and the equipment produces 1,500 units.
Instructions
Compute depreciation expense under each of the following methods. Scott is on a calendar-year basis ending December 31.
(a) Straight-line method for 2014.
(b) Activity method (units of output) for 2014.
(c) Activity method (working hours) for 2014.
(d) Sum-of-the-years'-digits method for 2016.
(e) Double-declining balance method for 2015