On January 1, 2013, Dominquez Inc. purchased equipment at a cost of $300,000. Th

Question

On January 1, 2013, Dominquez Inc. purchased equipment at a cost of $300,000. The equipment has an estimated salvage value of $20,000. The equipment has an estimated useful life of ten years or 140,000 units. The actual units of product produced during 2013 and 2014 were 15,000 and 16,000, respectively. Prepare the journal entries to record depreciation for 2013 and 2014 using each of the following depreciation methods: 1. Straight-line Depreciation 2. Double-Declining-balance method of depreciation 3. Units-of-production Depreciation 4. Calculate the book value at the end of 2013 and 2014 under all 3 methods. Prepare the journal entries to record depreciation for 2013 and 2014 using each of the following depreciation methods:

Explanation / Answer

Details AmT $ Cost Of Equipment               300,000 Less Salvage                   20,000 Depreciable value                 280,000 Useful Life in years                           10 Yearly depreciation by SL method=                 28,000 Estimated no of units in machine life               140,000 Depreciation amount per unit of production                      2.00 Sl depreciation rate = 10% DD balance depreciation rate on Carrying value = 20% Book Value details SL method Beginning Book Value Depreciation Rate /Yearly Depreciation Depreciation Amt $ Accumulated depreciation Year end Book value Year 2013               300,000               28,000              28,000                28,000     272,000.00 Year 2014               272,000               28,000              28,000                56,000     244,000.00 Book Value details DD balance method Beginning Book Value Depreciation Rate on Book Value   Depreciation Amt $ Accumulated depreciation Year end Book value Year 2013               300,000 20%              60,000                60,000     240,000.00 Year 2014               240,000 20%              48,000              108,000     192,000.00 Book Value details Units of Production method Beginning Book Value Depreciation Rate per unit production Ubnits Produced Depreciation Amt $ Accumulated depreciation Year end Book value Year 2013               300,000                   2.00              15,000                30,000             30,000     270,000.00 Year 2014               270,000                   2.00              16,000                32,000             62,000     238,000.00 Depreciation Jouirnal Entry -SL method Year   Account Titile Dr $ Cr $             2,013 Accumulated Depreciation -Equipment                 28,000 Depreciation Expense-Equipment                 28,000             2,014 Accumulated Depreciation -Equipment                 28,000 Depreciation Expense-Equipment                 28,000 Depreciation Jouirnal Entry -DDB method Year   Account Titile Dr $ Cr $             2,013 Accumulated Depreciation -Equipment                 60,000 Depreciation Expense-Equipment                 60,000             2,014 Accumulated Depreciation -Equipment                 48,000 Depreciation Expense-Equipment                 48,000 Depreciation Jouirnal Entry Units of Production   method Year   Account Titile Dr $ Cr $             2,013 Accumulated Depreciation -Equipment                 30,000 Depreciation Expense-Equipment                 30,000             2,014 Accumulated Depreciation -Equipment                 32,000 Depreciation Expense-Equipment                 32,000

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