Question

Super Saver Groceries purchased store equipment for $43,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $4,000. During the 10-year period, the company expects to use the equipment for a total of 13,000 hours. Super Saver used the equipment for 1,200 hours the first year. Required: Calculate depreciation expense of the equipment for the first year, using each of the following methods. (Do not round your intermediate calculations.)

Answer 1

$3900

$8600

$3600

Step-by-step explanation:

This is the remaining part of the question :

Required: Calculate depreciation expense of the equipment for the first year, using each of the following methods

1. Straight-line.

2.Double Declining Method

3.Activity Based

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

(43,000 - 4000) / 10 = $3900

Depreciation expense using the double declining method = Depreciation factor x cost of the asset

Depreciation factor = 2 x (1/useful life) = 2/10 = 0.2

Depreciation expense = 0.2 x $43,000 = $8600

Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)

(1200 / 13,000) x (43,000 - 4000) = $3600