The Golden Broom Cleaning Service acquired new equipment: Cost $118,400 Residual

Question

The Golden Broom Cleaning Service acquired new equipment: Cost $118,400 Residual (Salvage Value) $12,800 Estimated useful Life 8 years or 40,000 Units Required: Determine the book value of the asset at the end of the THIRD year if the straight-line depreciation method is used. Determine the depreciation expense for the SECOND year assuming double-declining balance depreciation method is used. What would be the depreciation expense for the FIRST year if the units-of-production depreciation method is used and 6,000 units were produced? No partial credit will be awarded unless the details of your computations are provided in the space above.

Explanation / Answer

a) $ 78,800 118400-(118400-12800)*3/8 b) $ 22,200 (118400-29600)*25% (118,400*25% = 29,600) c) $ 15,840 (118400-12800)*6000/40000

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