Depreciation and Depletion Problems

/in /by

ForestCorp purchases a piece of equipment costing $540,000. The equipment has an estimated useful life of six years and a trade in value of $30,000.

a.) Under the straight line method, what would be the depreciation charge per year?

Cost:        
Trade-in:          
Amount to depreciate:        
Divided by 6 years:          

b.) Suppose that the equipment is expected to produce a total of 100,000 units as follows:

Year 1:               24,000
Year 2:               23,000
Year 3:               19,000
Year 4:               18,000
Year 5:               10,000
Year 6:                  6,000
Total:

Use the product units method to find the depreciation charges for each year. Construct a depreciation table. Insert rows below to fit.

Beginning NBVChargeEnding NBV
1          540,000                 
2                             
3                               
4                           
5                                 
6