Computing Depreciation Using Various Depreciation Methods To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are used for equipment purchased on January 1, 2020. Cost and residual value Acquisition cost Residual value Estimated service life: $11,250 Years 5 $450 Service hours 9,000 Productive output (units) 21,600 Required Compute annual depreciation using each of the following methods. Depreciation Expense $ 0.2 2020 2,160 a. Straight-line depreciation: Compute the depreciation rate and amount for each year. Depreciation Rate 2021 2,160 2022 $ 2,160 $ 2023 2,160 2024 2,160 b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount of depreciation expense for the first year assuming 1,980 service hours of actual operation. Depreciation Rate 1.2 Depreciation Expense 2020 2,376 c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount of depreciation expense for the first year assuming 3,600 units of output. Depreciation Rate Depreciation Expense $ 0.5 2020 1,800 d. Sum-of-the-years'-digits method: Compute the depreciation amount for each year. 2020 2021 2022 2023 2024 $ 4,500 x $ 2,700 x $ 2,304 x $ 1,536 x $ 750 x e. Double-declining-balance method: Compute the depreciation amount for each year. 2020 2021 2022 2023 2024 $ 4,500 $ 2,700 $ 1,620 $ 972 $ 583.2 x