Depreciation methods are:
Straight line depreciation expense = depreciable cost / estimated useful life
DDB depreciation expense = 2 x straight-line rate x beginning book value
Units of production depreciation expense per unit = depreciable cost / useful life in units
Carrying amount = historical cost – accumulated depreciation
Depreciable cost = historical cost – estimated residual value
An analyst gathered the following information about an equipment’s expected production life and use. The equipment was purchased for $10,000 and is expected to have 0 salvage value at the end of its useful life.
|Year 1||Year 2||Year 3||Year 4||Year 5|
Calculate the Year 1 depreciation expense under the units-of-production method and the straight-line method.
Straight line method:
Units of production method: