Assume That Deane Company Purchased Factory Equipment on January 1,2012,for

Essay

Assume that Deane Company purchased factory equipment on January 1,2012,for $75,000.The equipment has an estimated life of five years and an estimated residual value of $6,000.Deane's accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset.Because the company is beginning a new production process,the equipment will be used to produce 5,000 units in 2012,but production subsequent to 2012 will increase by 5,000 units each year.
REQUIRED:
Calculate the depreciation expense,accumulated depreciation,and book value of the
equipment under both methods for each of the five years of its life.Would the units-of production method yield reasonable results in this situation? Explain.