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On Jan 3, 2017, Limestone Enterprises purchased equipment for $134,500. The equipment has a useful life...

On Jan 3, 2017, Limestone Enterprises purchased equipment for $134,500. The equipment has a useful life of five years or of 15,000 working hours and after the useful life it will have a residual value of $12,000. The machine was used for 1,400 hours in 2017, 2,100 hours in 2018; 3,700 hours in 2019.

Required:

1.     Calculate the depreciation expense for 2017 and 2018 under each of the following methods:  

                        i.         Straight-line,

                       ii.         Double diminishing-balance, and

                     iii.         Units-of -production

2.     Record the journal entry for depreciation expense for the year ended December 31, 2017 under the straight-line method.

Which method results in the lowest profit for the first two years? Why?

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