Assume that Sample Company purchased factory equipment on January 1, 2017, for $75,000. The equipment has an estimated life of five years and an estimated residual value of $7,500. Sample’s accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset. Because the company is beginning a new production process, the equipment will be used to produce 10,000 units in 2017, but production subsequent to 2017 will increase by 10,000 units each year.
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