Blue Company purchased equipment for $301,000 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $61,000. Estimated production is 20,000 units and estimated working hours are 10,000. During 2025 Blue uses the equipment for 1,010 hours, and the equipment produces 1,300 units. Compute depreciation expense under each of the following methods: (Blue is on a calendar-year basis ending December 31.) (Do not round intermediate calculations. Round final answers to O decimal places, e.g. 45,892.) (a) Straight-line method for 2025 $

Blue Company purchased equipment for $301,000 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $61,000. Estimated production is 20,000 units and estimated working hours are 10,000. During 2025 Blue uses the equipment for 1,010 hours, and the equipment produces 1,300 units. Compute depreciation expense under each of the following methods: (Blue is on a calendar-year basis ending December 31.) (Do not round intermediate calculations. Round final answers to O decimal places, e.g. 45,892.) (a) Straight-line method for 2025 $

Name: Blue Company purchased equipment for $301,000 on October 1, 2025. It
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Description: Blue Company purchased equipment for $301,000 on October 1, 2025. It is estimated that the equipment will have a useful lifeof 8 years and a salvage value of $61,000. Estimated production is 20,000 units and estimated working hours are 10,000. Durin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

Blue Company purchased equipment for $301,000 on October 1, 2025. It is estimated that the equipment will have a useful life
of 8 years and a salvage value of $61,000. Estimated production is 20,000 units and estimated working hours are 10,000. During 2025,
Blue uses the equipment for 1,010 hours, and the equipment produces 1,300 units.
Compute depreciation expense under each of the following methods: (Blue is on a calendar-year basis ending December 31.) (Do not
round intermediate calculations. Round final answers to O decimal places, e.g. 45,892.)
(a) Straight-line method for 2025
(b)
(c) Activity method (working hours) for 2025
(d)
Activity method (units of output) for 2025
(e)
Sum-of-the-years'-digits method for 2027
Double-declining-balance method for 2026
$
$
$
$
$

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