On April 29, 2011, SugarBear Company acquired equipment costing $150,000, which will be depreciated on the assumption that the equipment will be useful for five years and have a residual value of $12,000. The estimated output from this equipment is as follows: 2011—15,000 units; 2012—24,000 units; 2012—30,000 units; 2014—28,000 units; 2015—18,000 units. The company is now considering possible methods of depreciation for this asset.
Required:
a. Calculate what the depreciation expense would be for each year of the asset's life, if the company chooses:
i. The straight-line method
ii. The units-of-production method
iii. The double-declining-balance method
b. Briefly discuss the criteria that a company should consider when selecting a depreciation method.