Problem 11-1 (P11-1) Depreciation Method
The Winsey Company purchased equipment on January 2, 2010, for $700,000. The equipment has the following characteristics:
Estimated service life 20 years 100,000 hours 950,000 units of output
Estimated residual value $50,000
During 2010 and 2011, the company used the machine for 4,500 and 5,500
hours respectively and purchased 40,000 and 60,000 units respectively.
Compute he depreciation for 2010 and 2011 under each of the following
methods:
1. Single-line
2. Hours worked
3. Units of output
4. Sum-of-the-years-digits
5. Double-declining-balance
6. 150%-declining-balance
7. Compute the company’s return on assets (net income divided by
average total assets, as discussed in chapter 6) for each method for
2010 and 2011, assuming that income before depreciation is$100,000. For
simplicity, use ending assets, and ignore interest, income taxes , and
other assets.
Click here for the solution: (Depreciation Method) The Winsey Company purchased equipment on January 2, 2010, for $700,000
