on october 1, 2024, the allegheny corporation purchased equipment for $115,000. the estimated service life of the equipment is 10 years and the estimated residual value is $5,000. the equipment is expected to produce 220,000 units during its life. required: calculate depreciation for 2024 and 2025 using each of the following methods. partial-year depreciation is calculated based on the number of months the asset is in service.straight-line.

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tutorconsortium650 tutorconsortium650 · Answer 1 · 2022-12-16T10:03:32+01:00

Depreciation expenses using Straight line is $11,000

Depreciation expenses using Double-declining balance is $18,400

Depreciation expenses using Units of production is $12,500

Straight-line method of depreciation is regarded as the simplest form of depreciation

The formulae for this method is {[Purchase value of equipment - Estimated residual value) / Estimated service life}

Formulae for Units-of-production method is (Purchase value of equipment - estimated residual value) / Estimated production units

Units-of-production method = [$115,000 - $5,000] / $220,000 units

Units-of-production method = $110,000 / 220,000 units

Units-of-production method = $0.5 per units

For 2021, Depreciation = Production units in 2021 year * Depreciation per unit

Depreciation = 30,000 units × $0.5

Depreciation = $15,000

For 2022, Depreciation = Production units in 2022 year * Depreciation per unit

Depreciation = 25,000 units * $0.5

Depreciation = $12,500

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