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Calculate depreciation expense and accumulated depreciation

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Problem - Straight-Line and Units-of-Production Methods - Assume that Sample Company purchased factory equipment on January 1, 2016, for $60,000. The equipment has an estimated life of five years and an estimated residual value of $6,000. Sample's accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset. Because the company is beginning a new production process, the equipment will be used to produce 10,000 units in 2016, but production subsequent to 2016 will increase by 10,000 units each year.

Required - Calculate the depreciation expense, accumulated depreciation, and book value of the equipment under both methods for each of the five years of its life. Would the units-of-production method yield reasonable results in this situation? Explain.

Reference no: EM132865498

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