There are four problems. Each one is worth the score indicated next to the probl

Question

There are four problems. Each one is worth the score indicated next to the problem number. Show all work for complete credit. You may attach extra pages if you so desire. Please be NEAT when writing your answers. I cannot grade illegible answers. Problems portion of the test is worth a total of 30 points. Brenan, Inc. purchased equipment at the beginning of 2004 for $4,100,000, Brenan. The equipment has an estimated residual value (salvage value) of $1,00,000 and an estimated life of 5 years or 200,000 hours of operation. The machinery was operated for 40,000 hours in 2004, 20,000 hours in 2005, 60,000 hours in 2006, 50,000 hours in 2007, and 30,000 hours in 2008. Create a depreciation schedule for each of the following depreciation methods for the years 2004 to 2008: Straight-line depreciation method Units-of-production method Double-declining-balance depreciation method

Explanation / Answer

equipment

Stragiht line depreciaion = $4,100,000- $100,000/5 = $800,000

Units of production method

Double declining method

Date Cost Beginnin value Depreciation expense Accumulated depreciation Book value ending 2004 $4,100,000 $4,100,000 $800,000 $800,000 $3,300,000 2005 3,300,000    800,000 1,600,000 2,500,000 2006 2,500,000 800,000 2,400,000 1,700,000 2007 1,700,000 800,000 3,200,000     900,000 2008      900,000 800,000 4,000,000     100,000

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