Depreciation by Three Methods; Partial Years Razar Sharp Company purchased equip

Question

Depreciation by Three Methods; Partial Years

Razar Sharp Company purchased equipment on July 1, 2014, for $46,710. The equipment was expected to have a useful life of three years, or 6,480 operating hours, and a residual value of $1,350. The equipment was used for 1,200 hours during 2014, 2,300 hours in 2015, 1,900 hours in 2016, and 1,080 hours in 2017.

Required: Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, 2016, and 2017, 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 2014 $ 2015 $ 2016 $ 2017 $

b. Units-of-output method Year Amount 2014 $ 2015 $ 2016 $ 2017 $

c. Double-declining-balance method Year Amount 2014 $ 2015 $ 2016 $ 2017 $

Explanation / Answer

Calculation of the depreciation Purchase Price 46710 Residual value 1350 Straqight Line method Depreciation per year (46710-1350)/3 $15,120 Year Depreciation 2014 7560 (15120/2 i.e. half year dep) 2015 15120 2016 15120 2017 7560 Units of output method 1200+2300+1900+1080 6480 Hours Depreciation per unit (46710-1350)/6480 7 Year Units Dep ( Units*7) 2014 1200 8400 2015 2300 16100 2016 1900 13300 2017 1080 7560 Double declining method 15120/45360 33.33% Year Depreciation Value 2014 15568.44 31141.56 2015 10379.48 20762.08 2016 19412.08 1350

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