Capitalize or Revenue recognize the expenditure on Acquisition cost.
The equipment has an estimated life of five years and an estimated residual value of $6,000. Sample's accountant is considering whether to use the straight-line of the units-of-production method to depreciate the asset. Because the company is beginning a new production process, the equipment will be used to produce 10,000 unit in 2007, but production subsequent to 2007 will increase by 10,000 units each year.