Trusty Industries purchased machinery on January 2, 2011, at a total cost of $85,000. Trusty planned to use the machinery for 8 years or 60,000 hours, then to sell the equipment for $15,000. During 2011 and 2012, the machinery was used 7,000 and 7,500 hours, respectively.
Part A. Compute the amount of depreciation expense that the company will recognize in 2011 and 2012, assuming the company uses the straight-line method.
Part B. Compute the amount of depreciation expense that the company will recognize in 2011 and 2012, assuming the company uses the units-of-method.
Part C. Which depreciation method would you recommend that the firm use, based upon what you know (excluding Part A & B)
REQUIRED: For each part, compute the results. Be sure to show your calculations
Trusty Industries purchased machinery on January 2, 2011, at a total cost of $85,000. Trusty planned to use the machinery for 8 years or 60,000 hours, then to sell the equipment for $15,000. During 2011 and 2012, the machinery was used 7,000 and 7,500 hours, respectively.
Part A. Compute the amount of depreciation expense that the company will recognize in 2011 and 2012, assuming the company uses the straight-line method.
Part B. Compute the amount of depreciation expense that the company will recognize in 2011 and 2012, assuming the company uses the units-of-method.
Part C. Which depreciation method would you recommend that the firm use, based upon what you know (excluding Part A & B)
REQUIRED: For each part, compute the results. Be sure to show your calculations