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Record the journal entry for depreciation expense for year

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Reference no: EM132916194

Problem - On Jan 2, 2017, Sandstone Enterprises purchased equipment for $129,200. The equipment has a useful life of four years or of 12,000 working hours and after the useful life it will have a residual value of $14,000. The machine was used for 1,900 hours in 2017, 2,800 hours in 2018; 3,700 hours in 2019.

Required -

1. Calculate the depreciation expense for 2017 and 2018 under each of the following methods:

i. Straight-line,

ii. Double diminishing-balance, and

iii. Units-of -production

2. Record the journal entry for depreciation expense for the year ended December 31, 2017 under the straight-line method.

3. Which method results in the lowest profit for the first two years? Why?

Reference no: EM132916194

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