Vaughn Company purchased equipment for $201,700 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $14,000. Estimated production is 32,000 units and estimated working hours are 20,000. During 2025, Vaughn uses the equipment for 550 hours and the equipment produces 1,000 units.
Vaughn Company purchased equipment for $201,700 on October 1, 2025. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $14,000. Estimated production is 32,000 units and estimated working hours are 20,000. During 2025, Vaughn uses the equipment for 550 hours and the equipment produces 1,000 units.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Vaughn Company purchased equipment for $201,700 on October 1, 2025. It is estimated that the equipment will
have a useful life of 8 years and a salvage value of $14,000. Estimated production is 32,000 units and estimated
working hours are 20,000. During 2025, Vaughn uses the equipment for 550 hours and the equipment
produces 1,000 units.
Compute depreciation expense under each of the following methods. Vaughn is on a calendar-year basis ending
December 31. (Round rate per hour and rate per unit to 2 decimal places, e.g. 5.35 and final answers to 0 decimal places, e.g.
45,892.)
(a) Straight-line method for 2025
(b)
(c)
(d)
(e)
Activity method (units of output) for 2025
Activity method (working hours) for 2025
Sum-of-the-years'-digits method for 2027
Double-declining-balance method for 2026
+A
GA
$
$
$
5,866
5,870
5,165
10,428
12,606
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