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Compute the depreciation charge

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Reference no: EM132830502

Question - Bigfoot Java, a company that sells coffee, purchased equipment on June 1, 2015 for $444,000. It is estimated it will have a 8 year useful life, salvage value of $10,000. The equipment is expected to be able to produce 500,000 coffee drinks and last 11,100 hours. During 2020, Bigfoot Java uses the equipment for 800 hours and produced 38,000 coffee drinks.

Instructions -

Compute the depreciation charge in 2020 under each of the following methods:

-Sum-of-the-years-digits

-Double declining balance

Also, explain why might a company choose sum-of-the-years-digits method of depreciation?

Reference no: EM132830502

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