Ludmila Manufacturing purchased a piece of production equipment on January 1, 2009 The equipment cost $6,500 and was estimated to have a salvage value of $500 at the end of its six year life or 12,000 hours of use Required (a) Compute depreciation expense on the production equipment for 2009 and 20...

Calculations Cost Salvage Value Depreciable Amount Useful Life years Useful Life units 65 ...

Ludmila Manufacturing purchased a piece of production equipment on January 1, 2009. The equipment cost $6,500 and

Question:

Ludmila Manufacturing purchased a piece of production equipment on January 1, 2009. The equipment cost $6,500 and was estimated to have a of $500 at the end of its six-year life or 12,000 hours of use.
Required:
(a) Compute depreciation expense on the production equipment for 2009 and 2010 and prepare the appropriate journal entries using the:
(1) Straight-line depreciation method
(2) Double-declining-balance depreciation method
(b) Assume that Ludmila uses the units-of-production method. Compute depreciation expense for 2009 and 2010 and prepare the appropriate journal entries, if the equipment were used 2,500 hours in 2009 and 1,900 hours in 2010.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...