SPI Ltd. purchased new excavating equipment at the beginning of Year 1. The equipment has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in Year 1. The equipment was used 20,000 hours during Year 1 and 24,000 hours during Year 2. The number of expected hours over five years is 100,000. What is the amount by which double-declining-balance depreciation would exceed straight-line depreciation over the five-year life of the equipment? $0 $6.000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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SPI Ltd. purchased new excavating equipment at the beginning of Year 1. The equipment has a cost of
$37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's
depreciation expense is to be recorded in Year 1. The equipment was used 20,000 hours during Year 1
and 24,000 hours during Year 2. The number of expected hours over five years is 100,000.
What is the amount by which double-declining-balance depreciation would exceed
straight-line depreciation over the five-year life of the equipment?
$0
$6,000
$7,000
$37,000
Transcribed Image Text:SPI Ltd. purchased new excavating equipment at the beginning of Year 1. The equipment has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in Year 1. The equipment was used 20,000 hours during Year 1 and 24,000 hours during Year 2. The number of expected hours over five years is 100,000. What is the amount by which double-declining-balance depreciation would exceed straight-line depreciation over the five-year life of the equipment? $0 $6,000 $7,000 $37,000
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