Winsey Company purchased equipment on January 2, 2016, for $700,000. The equipment has the following characteristics: Estimated service Ife 20 years, 100,000 hours, 950,000 units of output Estimated residual value $50,000 During 2016 and 2017, the company used the machine for 4,500 and 5,500 hours, respectively, and produced 40,000 and 60,000 units, respectively.
Required:
Compute depreciation expense for 2016 and 2017 under each of the following methods:
1. Straight- line method
2. Activity method based on hours worked (round the depreciation rate per hour to 2 decimal places)
3. Activity method based on units of output (round the depreciation rate per unit to 2 decimal places)
4. Sum-of-the- years’- digits method
5. Double-declining- balance method
6. 150%- declining- balance method
7. Next Level If Winsey used a service life of 16 years, 80,000 hours, or 750,000 units of output, what would be the effect on depreciation expense under the straight- line, sum- of- the- years’- digits, and declining- balance depreciation methods? Round your answers to the nearest dollar.