Depredation by Three Methods; Partial Years Razar Sharp Company purchased equipm

Question

Depredation by Three Methods; Partial Years Razar Sharp Company purchased equipment on July 1, 2012, for $112,590. me equipment was expected to have a useful life of three years, or 8,100 operating hours, and a Ilu of $3,240. The equipment was used for 1,500 hours during 2012, 2,800 hours in 2013, 2,400 hours in 2014, and 1,400 hours in 2015, Required: Determine the amount of depreciation expense for the years ended December 31, 2012, 2013, 2014, and 2015, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount 2012 $ 2013 $ 2014 $ 2015 $ b. Units-of-output method Year Amount 2012 $ 2013 $ 2014 $ 2015 $ C. Double-declining-balance method Year Amount 2012 $ 2013 $ 2014 $ 2015 $ Check My Work (3 remaining)

Explanation / Answer

a)SLM

Depreciation per year = (cost -residual life) /useful life

                                = (112590 - 3240) / 3

                                = 109350/3

                               = 36450

2)units of output method:

Per hour rate = (cost -residul value )/estimated hours

                    = (112590 -3240)/8100

                     = $ 13.50 per hour

3)DDM:

Rate of depreciation = 2 /useful life = 2/3

= .6667 or 66.67%

2012 36450*6/12 = 18225 2013 36450 2014 36450 2015 36450*6/12 = 18225

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