Pronghorn Company purchased equipment for $2196,240 on October 1, 2017. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,240. Estimated production is 40,000 units and estimated working hours are 20,300. During 2017, Pronghorn uses the equipment for 530 hours and the equipment produces 1,100 units.

Compute depreciation expense under each of the following methods. Pronghorn is on a calendar-year basis ending December 31.

(a) Straight-line method for 2017………………………….........……$25,500

(b) Activity method (units of output) for 2017………………...…..$5,610

(c) Activity method (working hours) for 2017…………………......$5,326

(d) Sum-of-the-years’-digits method for 2019…………………...$34,000

(e) Double-declining-balance method for 2018………..……….$50,681

Answer rating: 100% (QA)

Depreciation is an allocation of cost changed over useful life of asset Depreciatio... View the full answer