Straight-Line and Units-of-Production Methods Assume that Sample Company purchased factory equipment on January 1, 2017, for $70,000....

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Finance

Straight-Line and Units-of-Production Methods
Assume that Sample Company purchased factory equipment onJanuary 1, 2017, for $70,000. The equipment has an estimated lifeof five years and an estimated residual value of $7,000. Sample'saccountant is considering whether to use the straight-line or theunits-of-production method to depreciate the asset. Because thecompany is beginning a new production process, the equipment willbe used to produce 10,000 units in 2017, but production subsequentto 2017 will increase by 10,000 units each year.
Required:
1. Calculate the depreciation expense, accumulated depreciation,and book value of the equipment under both methods for each of thefive years of its life. Enter all amounts as positive values.
Straight-line method:
Annual Accumulated Book
Year Depreciation Depreciation Value
2017 $    $    $
2018
2019
2020
2021
Units-of-production method:
Annual Accumulated Book
Year Depreciation Depreciation Value
2017 $    $    $
2018
2019
2020
2021
2. In this exercise, The units of production method results in adepreciation pattern opposite to which depreciation method?

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Straightline method Year Annual Depreciation Accumulated Depreciation Book Value 2017 12600 12600 57400 2018 12600 25200 44800 2019 12600 37800 32200 2020 12600 50400 19600 2021 12600 63000 7000 See Answer

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Straight-Line and Units-of-Production MethodsAssume that Sample Company purchased factory equipment onJanuary 1, 2017, for $70,000. The equipment has an estimated lifeof five years and an estimated residual value of $7,000. Sample'saccountant is considering whether to use the straight-line or theunits-of-production method to depreciate the asset. Because thecompany is beginning a new production process, the equipment willbe used to produce 10,000 units in 2017, but production subsequentto 2017 will increase by 10,000 units each year.Required:1. Calculate the depreciation expense, accumulated depreciation,and book value of the equipment under both methods for each of thefive years of its life. Enter all amounts as positive values.Straight-line method:AnnualAccumulatedBookYearDepreciationDepreciationValue2017$ $ $ 2018 2019 2020 2021 Units-of-production method:AnnualAccumulatedBookYearDepreciationDepreciationValue2017$ $ $ 2018 2019 2020 2021 2. In this exercise, The units of production method results in adepreciation pattern opposite to which depreciation method?

	Annual	Accumulated	Book
Year	Depreciation	Depreciation	Value

2017	$	$	$
2018
2019
2020
2021

	Annual	Accumulated	Book
Year	Depreciation	Depreciation	Value

2017	$	$	$
2018
2019
2020
2021