Question: Smith Company purchased new equipment on January 1, 2008, at cost of $150,000. The equipment is expected to have an eight (8) year life and a $15,000 salvage value. The equipment is expected to produce 675,000 finished products during its eight (8) year life. Production during 2008 was 70,000 units and during 2009 were 110,000 units.
Calculate the amount of depreciation expense to be recorded on the equipment for the years 2008 & 2009 under each of the following methods:
Straight line, Units of production and Double declining balance.