# Depreciation ComputationsFive Methods, Partial Periods Agazzi Company purchased equipment for \$304,000 on October 1, 2010. It is estimated that the equipment will have a useful life of 8 years and a salvage value of \$16,000. Estimated production is 40,000 units and estimated working hours are 20,000. During 2010, Agazzi uses the equipment for 525 hours and the equipment produces 1,000

Depreciation Computations—Five Methods, Partial Periods Agazzi Company purchased equipment for \$304,000 on October 1, 2010. It is estimated that the equipment will have a useful life of 8 years and a salvage value of \$16,000. Estimated production is 40,000 units and estimated working hours are 20,000. During 2010, Agazzi uses the equipment for 525 hours and the equipment produces 1,000 units. Compute Depreciation expense under each of the following methods. Agazzi is on a calendar-year basis ending December 31.

(a) Straight-line method for 2010.

(b) Activity method (units of output) for 2010.

(c) Activity method (working hours) for 2010.

(d) Sum-of-the-years’-digits method for 2012.

(e) Double-declining-balance method for 2011.

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing...
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...