In July 2017, Dogwood Inc. purchased new equipment for $200,000. Dogwood's management estimates that the equipment's useful life will be eight years and that its residual value will be $10,000. Dogwood's year-end is June 30.

a. Prepare a depreciation schedule for each year of the new piece of equipment's life using
i. Straight-line depreciation
ii. Declining balance depreciation (30 percent)
iii. Units-of-production method
Your depreciation schedule should show the depreciation expense for each year and the carrying amount of the equipment and accumulated depreciation at the end of each year. For the units-of-production method, assume that 10 percent of the production is produced in each of fiscal 2018, 2019, 2024, and 2025, and 15 percent in each of the remaining years.
b. Which method do you think Dogwood's managers would prefer if the company was planning on going to the bank for a loan? Explain.

  • CreatedFebruary 26, 2015
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