Purity Ice Cream Company bought a new ice cream maker at the beginning of the ye

Question

Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of $24,000 The estimated useful life was four years, and the residual value was $2,160. Assume that the estimated productive life of the machine was 10,400 hours. Actual annual usage was 4,160 hours in year 1; 3,120 hours in year 2; 2,080 hours in year 3; and 1,040 hours in year 4. Required: 1. Complete a separate depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.) a. Straight-line. Depreciation Accumulated Net Year Expense Depreciation Book Value At acquisition 4

Explanation / Answer

Purity Ice Cream Company All Amounts in $ Calculation of Depreciation, Method Wise Book Value for Depreciation = $ 24,000 - $ 2,160 = $ 21,840 1. a. Straight Line Method Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition 0 1 5460 5460 16380 2 5460 10920 10920 3 5460 16380 5460 4 5460 21840 0 b. Units of Production Method Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition 0 1 8736 8736 13104 2 6552 15288 6552 3 4368 19656 2184 4 2184 21840 0 b. Double Declining Balance Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition 0 1 10920 10920 10920 2 10920 21840 0 3 4

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