Tamarisk Company purchased equipment for $241,500 on October 1, 2017. It is esti

Question

Tamarisk Company purchased equipment for $241,500 on October 1, 2017. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $13,800. Estimated production is 39,600 units and estimated working hours are 20,400. During 2017, Tamarisk uses the equipment for 520 hours and the equipment produces 1,000 units Compute depreciation expense under each of the following methods. Tamarisk is on a calendar-year basis ending December 31. (Round rate per hour and rate per unit to 2 decimal places, e.g. 5.35 and final answers to O decimal places, e.g. 45,892.) (a) Straight-line method for 2017 (b) Activity method (units of output) for 2017 (c) Activity method (working hours) for 2017 (d) Sum-of-the-years'-digits method for 2019 (e) Double-declining-balance method for 2018

Explanation / Answer

a) Straight line method (241,500-13,800)/8*3/12 7116 answer b) Activity method (241500-13800)/39600 5.75 depreciaion 5.75*1000 5750 c) Activity method (working hours) (241500-13800)/20,400 11.16 11.16*520 5803 d) 8*9/2 36 depreciation (241500-13800)*8/36 50600 depreciation expense 50600*3/12 12650 e) double declining 241500*25%*3/12 15094

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