To Do Assig 31, 2018, Post-closing Saved Help Save & Exit Submit On January 1, 2
ID: 2437524 • Letter: T
Question
To Do Assig 31, 2018, Post-closing Saved Help Save & Exit Submit On January 1, 2018, Canseco Plumbing Fixtures purchased equipment for $42,000. Residual value at the end of an estimated four-year service life is expected to be $8,000. The company expects the machine to operate for 10,000 hours. The machine operated for 2,800 and 3,600 hours in 2018 and 2019, respectively. ts a. Calculate depreciation expense for 2018 and 2019 using straight line method. b. Calculate depreciation expense for 2018 and 2019 using sum-of-the-years-digits method. c. Calculate depreciation expense for 2018 and 2019 using double-declining balance method d. Calculate depreciation expense for 2018 and 2019 using units-of-production method (using machine hours). Complete this question by entering your answers in the tabs below Calculate depreciation expense for 2018 and 2019 using straight line method De 2018 2019 LLC Prev 1 of 13 ill Next >Explanation / Answer
A. Depreciation expenses for 2018 and 2019 under straight line method calculation
In Straight line method the amount of depreciation will remain same i.e ($42000 - $8000)/ 4years = $8500 for both the years
B.Depreciation using sum of the year digit method
As reasdual value of asset is $8000 it means the amount of asset which need to be depreciate is $42000 - $8000 = $34000
total estimated life of asset is 4 years , as per sum digit method summed years = !+2+3+4=10
depreciation expenses for 2018= 4/10 * 34000 =$13600
depreciation expenses for 2019=3/10* 34000 = $10200
C. Depreciation using double declining balance method
In this method we do not take salvage value as we are depreciating huge amount
Straight line method depreciation percentage without taking salvage value is {($42000- $8000)/4}/$42000 = 0.25 i.e 25%
in double declining method percentage = 25% * 2 =50%
depreciation amount in 2018 year = $42000 * 50% = $21000
depreciation amount for 2019 year = ($42000 - $21000) * 50% =$10500
D.Depreciation using units of production method
(cost of asset - salvage value) / expected hours the machine will operate = ($42000 - $8000) / !0000hours = $3.4/hour
Depreciation for 2018 = $3.4/hours * 2800 hours = $9520
Depreciation for 2019 = $3.4/hours * 3600 hours = $12,240
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