Answer:
b. Double-declining-balance
Explanation:
There is no harm in trying out all the methods and see for your self the one that will produce the maximum depreciation expense in 2019.
Units-of-production
Depreciation Expense = Units taken in the Period / Expected total amounts in units × Depreciable Amount (Cost - Salvage Value)
Therefore,
Depreciation Expense = 2,400 hours / 12,000 hours × ( $180,000 - $20,000)
= $32,000
Double -declining-balance
Depreciation Expense = 2 × SLDP × BVSLDP
SLDP = 100 ÷ Number of useful Life
= 100 ÷ 8
= 12.5 %
Therefore,
Depreciation Expense = 2 × 12.5 % × $180,000
= $45,000
Straight Line
Depreciation Expense = Cost - Residual Value ÷ Estimated Useful Life
= ($180,000 - $20,000) ÷ 8 years
= $20,000
<u>Conclusion</u>
As can be seen from the above calculation, Double-declining-balance produce the maximum depreciation expense in 2019.
