Depreciation by Three Methods; Partial Years Security IDs Company purchased equi

Question

Depreciation by Three Methods; Partial Years Security IDs Company purchased equipment on July 1, 2010, for $135,000. The equipment was expected to have a useful life of three years, or 12,000 operating hours, and a residual value of $6,000. The equipment was used for 1,500 hours during 2010, 3,500 hours in 2011, 5,000 hours in 2012, and 2,000 hours in 2013. Instructions: 1. Determine the amount of depreciation expense for the years ended December 31, 2010, 2011, 2012, and 2013, by (a) the straight-line method, (b) the units-of-production method, and (c) the double-declining-balance method. Do not round your intermediate calculations but round final answers to the nearest dollar. a. Straight-line method Year Amount 2010 $ 2011 $ 2012 $ 2013 $ b. Units-of-production method Year Amount 2010 $ 2011 $ 2012 $ 2013 $ c. Double-declining-balance Method Year Amount 2010 $ 2011 $ 2012 $ 2013 $

Explanation / Answer

Wow long question, answer is : A) Straight line method: 135000 - 6000 / 3 = 43000 For 2010 and 2013 the depreciation expense will be : 21500 , 21500 For 2011 and 2012 depreciation expense will be : 43000 , 43000 B) Units of production : 135000 - 6000 / ( 1500 + 3500 +5000 + 2000 ) = $ 10.75 per unit For 2010 : 10.75 * 1500 = 16125 For 2011: 3500 * 10.75 = 37625 For 2012: 5000 * 10.75 = 53750 For 2013: 2000 * 10.75 = 21500 C) Double declining method: First the percentage to be charged each year: 100 / 3 = 33.33 * 2 = 66.66 % So for 2010 : 135000 * 66.66 % : 89991 / 2 : 44996 For 2011: 135000 - 44996 = 90004 * 66.66 % : 59997 For 2012: 90004 - 59997 = 30007 * 66.66 % : 20003 For 2013 : 30007 - 20003 : 10004 * 66.66 % : 6669 / 2 : 3335

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.