Answer:
(1) straight-line = $9,975
(2) double-declining- balance = $23,000
(3) activity-based = $6,982.50
Explanation:
purchase cost $46,000
useful life 4 years
residual value $6,100
total operating hours 12,000
(1) straight-line = ($46,000 - $6,100) / 4 years = $9,975 fo 2021
(2) double-declining- balance = 2 x ($46,000 / 4 years) = $23,000 fro 2021
(3) activity-based = 2,100 hours x [$46,000 - $6,100) / 12,000 hours] = 2,100 x $3.325 = $6,982.50
The double declining method is considered an accelerated depreciation method, that is why it is so high.
