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.
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.

  • CreatedOctober 05, 2015
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