61. A Mexican corporation is computing the depreciation expense of a piece of
manufacturing equipment for the fiscal year ended December 31, 2010 using the
information below. The company takes a full year’s depreciation in the year of
acquisition.
Date of purchase January 1, 2010
Cost of equipment MXN 2,000,000
Estimated residual value MXN 200,000
Expected useful life 10 years
Total productive capacity 5,000,000 units
Production in 2010 800,000 units
The depreciation expense (in MXN) will most likely be:
A. 180,000 lower using the straight-line method compared with the double-declining
balance method.
B. 140,000 higher using the units-of-production method compared with the straight-line
method.
C. 112,000 higher using the double-declining method compared with the units-of-
production method.
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