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 $1$ of the current year.

$\backslash$table$[[$Cost and residual value,,Estimated service life:,$],[$Acquisition cost$,$$$5,000,$Years,$5],[$Residual value,$$200,$Service hours,$4,000],[,,$Productive output $($units$),9,600]]$

Required

Compute annual depreciation using each of the following methods.

a$.$ Straight$-$line depreciation: Compute the depreciation rate and amount for each year.

Note: Enter the rate in decimal form $($such as $0\mathrm{.}10)$ and not as a percentage.

$\backslash$table$[[$Depreciation Rate,,$0,,,,,,,,,],[,,$Year $1,,,$Year $2,,$Year $3,,$Year $4,,$Year $5],[$Depreciation Expense,$$,,0,$$$,0,$$$,0,$$$,0,0$$$,$c$]]$

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 $880$ service hours of actual operation.

$\backslash$table$[[$Depreciation rate per service hour $$,],[$Year $1,],[$Depreciation Expense $$,0]]$

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 $1,600$ units of output.

Depreciation rate per unit $

$0$

Year $1$