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Financial Accounting

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Depreciation Methods U of P

FINACT-DXYYEG

Spirit Corporation purchased a piece of equipment to be used in its operations for \$700,000 on May 31, 2017 with an estimated salvage value of \$100,000. This piece of equipment is estimated to produce 1,200,000 units over its life of 5 years. In 2017, 200,000 units were produced and in 2018, 420,000 units were produced.

If Spirit uses the units of production method, how much depreciation expense should Spirit Corporation record for 2017 and 2018 respectively?

A

\$100,000, \$210,000

B

\$116,667, \$245,000

C

\$70,000, \$120,000

D

\$81,667, \$140,000