On April 1, 2017, Mills Company acquired equipment for $125,000. The estimated useful life is six years, and the estimated residual value is $5,000. Mills estimates that the equipment can produce 25,000 unts of product. During 2017 and 2018, respectively, 3,000 units and 4,200 units were produced. Mills reports on a calendar year basis.  Required: Calculate depreciation expense for 2017 and 2018 under each of the following methods (ssume that Mills calculates depreciation to the nearest month in the year of acquisition): 1. Straight-line method. 2. Production method (units of output).

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On April 1, 2017, Mills Company acquired equipment for $125,000. The estimated useful life is six years, and the estimated residual value is $5,000. Mills estimates that the equipment can produce 25,000 unts of product. During 2017 and 2018, respectively, 3,000 units and 4,200 units were produced. Mills reports on a calendar year basis. 

Required:

Calculate depreciation expense for 2017 and 2018 under each of the following methods (ssume that Mills calculates depreciation to the nearest month in the year of acquisition):

1. Straight-line method.

2. Production method (units of output). 

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