Solution-Compute the depreciation charge under

Compute the depreciation charge under sum-of-the-years-digit

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Reference no: EM132796141

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

Problem 1: Compute the depreciation charge in 2020 under each of the following methods:

Sum-of-the-years-digits
Double declining balance

Problem 2: Also, explain why might a company choose sum-of-the-years-digits method of depreciation?

Reference no: EM132796141

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Compute the depreciation charge under sum-of-the-years-digit

Reference no: EM132796141

Reference no: EM132796141

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