Brenan, Inc. purchased equipment at the beginning of 2004 for $1,520,000. Brenan

Question

Brenan, Inc. purchased equipment at the beginning of 2004 for $1,520,000. Brenan. The equipment has an estimated residual value (salvage value) of $20,000 and an estimated life of 5 years or 100,000 hours of operation. The machinery was operated for 15,000 hours in 2004, 20,000 hours in 2005, 35,000 hours in 2006, 20,000 hours in 2007, and 10,000 hours in 2008. Create a depreciation schedule for each of the following depreciation methods for the years 2004 to 2008: 1. Straight-line depreciation method 2. Units-of-production method 3. Double-declining-balance depreciation method i tried doing it, but im not 100% sure with my answers..any help?

Explanation / Answer

Hi, Please find answers as follows: SLM = 1,520,000 - 20000/4 = 375000 per year Units of production method: =(1520000 - 20000)/100000 = 15 per hour Year 1 = 15000 * 15 = 225000 Year 2 = 20000*15 =300000 Year 3 = 35000*15 = 525000 Year 4 = 20000*15 = 300000 Year 5 = 10000*15 = 150000 DDL = Rate of Depreciation = 375000/1500000 = 25% With DDL = 25%*2 = 50% Year 1 = 1500000*.50 = 750000 Year 2 = (1500000 - 750000)*.50 = 375000 Year 3 = (1500000 - 750000 - 375000)*.50 = 187500 Year 4= (1500000 - 750000 - 375000 - 187500) *.50 = 93750 Year 5= (1500000 - 750000 - 375000 - 187500 -93750)*.50 = 46875 Thanks, Aman

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