On January 1, 2016, SugarBear Company acquired equipment costing $150,000, which will be depreciated on...
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Accounting
On January 1, 2016, SugarBear Company acquired equipment costing $150,000, which will be depreciated on the assumption that the equipment will be useful for five years and have a residual value of $12,000. The estimated output from this equipment is as follows: 2016 - 15,000 units; 2017 - 24,000 units; 2018 - 30,000 units; 2019 - 28,000 units; 2020 - 18,000 units. The company is now considering possible methods of depreciation for this asset.
Required:
a.) Calculate what the depreciation expense would be for each year of the asset's life, if the company chooses:
i.) The straight-line method
ii.) The units-of-production method
iii.) The double-diminishing-balance method
b.) Briefly discuss the criteria that a company should consider when selecting a depreciation method.
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