Mama's Frid Chicken bought equipment on January 2, 2018, for $30,000. The equipment was expected to remain in service for four years and to operate for 4,8000 hours. At the end of the equipment's useful life, Mama's estimates that its residual value will be $6,000. The equipment operated for 480 hours the first year, 1,440 hours the second year, 1,920 hours the third year, and 960 hours the fourth year. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. Which method tracks the wear and tear on the equipment most closely?
Mama's Frid Chicken bought equipment on January 2, 2018, for $30,000. The equipment was expected to remain in service for four years and to operate for 4,8000 hours. At the end of the equipment's useful life, Mama's estimates that its residual value will be $6,000. The equipment operated for 480 hours the first year, 1,440 hours the second year, 1,920 hours the third year, and 960 hours the fourth year. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. Which method tracks the wear and tear on the equipment most closely?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mama's Frid Chicken bought equipment on January 2, 2018, for $30,000. The equipment was expected to remain in service for four years and to operate for 4,8000 hours. At the end of the equipment's useful life, Mama's estimates that its residual value will be $6,000. The equipment operated for 480 hours the first year, 1,440 hours the second year, 1,920 hours the third year, and 960 hours the fourth year.
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Prepare a schedule of
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Which method tracks the wear and tear on the equipment most closely?
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