Reference no: EM132473952

Question 1: Calculate depreciation using three methods; recommend method.

On June 9, 2016, Blue Ribbon Companyr purchased manufacturing equipment at a cost of $345,000. Blue Ribbon estimated that the equipment will produce 600,000 units over its ?ve-year useful life, and have a residual value of $ 15,000. The company.r has a December 31 ?scal year end and has apolicyr of recording a half-year's depreciation in the year of acquisition Instructions

Question (a) Calculate depreciation under the straight-line method for 2016 and 2017.

Question (b) Calculate the depreciation expense under the double diminishing-balance method for 2016 and 2017.

Question (c) Calculate the depreciation expense under the units-of-production method, assuming the actual number of units produced was 71,000 in 2016 and 118,600 in 2017.

Question (d) In this situation, what factors should the company consider in determining which depreciation method it should use? Prepare depreciation schedules and answer questions. 

On April 22, 2016, Sandstone Enterprises purchased equipment for $129,200. The company expects to use the equipment for 12,000 working hours during its four-year life and that it will have a residual value of $ 14,000. Sandstone has a December 31 year end andpro-rates depreciationto the nearest month. The actual machine usage was 1,900 hours in 2016; 2,800 hours in 2017; 3,700 hours in 2018; 2,200 hours in 2019; and 1,100 hours in 2020.

Instructions 

Question 1: Prepare a depreciation schedule for the life of the asset under each of the following methods:

1. straight-line,

2. double diminishing-balance, and

3. units-of-production