SECTION B

Answer any two $(2)$ questions.

QUESTION $2[20$ Marks$]$

PART A $-16$ MARKS

ARG Company purchased equipment on January $1,2014,$ for $$90,000.$ It is estimated that the equipment will have a $$5,000$ salvage value at the end of its $5-$year useful life. It is also estimated that the equipment will produce $100,000$ units over its $5-$year life.

Required:

Compute the amount of depreciation expense for the year ended December $31,2014,$ assuming the company uses the straight$-$line method of depreciation.

$[3$ Marks$]$

If $16,000$ units of product are produced in $2014$ and $24,000$ units are produced in $2015,$ what is the book value of the equipment at December $31,2015?$ Assuming the company uses the units$-$of$-$activity depreciation method.

$[6$ Marks$]$

If the company uses the double$-$declining$-$balance method of depreciation, what is the balance of the Accumulated Depreciation$-$Equipment account at December $31,2016?$

$[7$ Marks$]$