Super Saver Groceries purchased store equipment for $36,000. Super Saver estimat

Question

Super Saver Groceries purchased store equipment for $36,000. Super Saver estimates that at the end of its 12-year service life, the equipment will be worth $3,000. During the 12-year period, the company expects to use the equipment for a total of 20,000 hours. Super Saver used the equipment for 1,500 hours the first year.

Calculate depreciation expense of the equipment for the first year, using each of the following methods, Straight-line, Double-declining-balance, and Activity-based.(Do not round your intermediate calculations.)

Super Saver Groceries purchased store equipment for $36,000. Super Saver estimates that at the end of its 12-year service life, the equipment will be worth $3,000. During the 12-year period, the company expects to use the equipment for a total of 20,000 hours. Super Saver used the equipment for 1,500 hours the first year.

Explanation / Answer

(36,000-3000)/12= 2,750 (straight line)

36,000*2/12= 6000 (DDB)

(36,000-3000)/20,000= 1.65/hour * 1500= 2,475 (activity based).

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