Montana Corporation acquired equipment for $475,000 at the beginning of the fisc
ID: 2371244 • Letter: M
Question
Montana Corporation acquired equipment for $475,000 at the beginning of the fiscal year, with an estimated useful life of four years or 21,500 operating hours, and a residual value of $45,000. The equipment was used for 7,600 hours in 2009, 6,800 hours in 2010, 5,100 hours in 2011 and 2,000 hours in 2012.
Instructions:
Determine the annual depreciation expense for each of the estimated five years of use, using the a) straight-line-method b) units of production and c) the double-declining-balance method.
Please show the work and explain how you got the answer....
The following columnar headings are suggested for recording the depreciation expense amounts:
Year straight-line-method units of production double-declining-balance method
1
2
3
4
Total
Explanation / Answer
straight-line-method Year straight-line-method 2009 $107,500 2010 $107,500 2011 $107,500 2012 $107,500 straight line depreciation formula : (475000-45000)/4=107500 units of production method Depreciation = (Number of Units Produced/Life in Number of Units)