Texts: Company B purchased equipment on account on September 3, 2019, at an invoice price of $180,000. A policy on the equipment was purchased on September 6, 2019. On September 20, 2019, Company B paid $4,300 for installation and testing of the equipment. The equipment was ready for use on October 1, 2019. Company B estimates that the equipment's useful life will be four years with a residual value of $6,000. It also estimates that, in terms of activity, the equipment's useful life will be 72,800 units. Company B has a September 30 fiscal year-end. Assume that actual usage is as follows:
# of Units Year Ended September 30, 2020: 15,400
# of Units Year Ended September 30, 2021: 23,700
# of Units Year Ended September 30, 2022: 20,000
# of Units Year Ended September 30, 2023: 14,600
Instructions:
a) Determine the cost of the equipment.
b) Prepare depreciation schedules for the life of the asset under the following depreciation methods:
i) Straight-line depreciation
ii) Diminishing balance depreciation at a rate of 50%
iii) Units-of-production depreciation
c) Determine the carrying amount as of September 30, 2022, under the straight-line depreciation method.
