Score: 0 of 20 pts 5 of 6 (D complete) HW Score: 0%, 0 of 50 pts E9-20 (book/sta

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Score: 0 of 20 pts 5 of 6 (D complete) HW Score: 0%, 0 of 50 pts E9-20 (book/static) EQuestion Help Crackling Fried Chicken bought equipment on January 2, 2016, for $21,000. The equipment was expected to remain in service for four years and to perform 3,600 fry jobs. At the end of the equipment's useful life, Crackling estimates that its residual value will be $3,000. The equipment performed 360 jobs the first year, 1,080 the second year, 1,440 the third year, and 720 the fourth year Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods. Show your computations. Note: Three depreciation schedules must be prepared 1. 2. Which method tracks the wear and tear on the equipment most closely? Requirement 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods. Show your computations. Note: Three depreciation schedules must be prepared. Begin by preparing a depreciation schedule using the straight-line method Straight-Line Depreciation Schedule Depreciation for the Year Date Cost Cost Rate Expense Value 1-2-2016 12-31-2016 12-31-2017 12-31-2018 12-31-2019

Explanation / Answer

Requirement 1 Straight line method Date Asset cost Depreciable cost Depreciation rate Depreciation expenses Acccumulated depreciation Book value 1/2/2016 $        21,000 12/31/2016 $        18,000 25% $        4,500 $                    4,500 $        16,500 12/31/2017 $        18,000 25% $        4,500 $                    9,000 $        12,000 12/31/2018 $        18,000 25% $        4,500 $                 13,500 $          7,500 12/31/2019 $        18,000 25% $        4,500 $                 18,000 $          3,000 Use of asset method Date Asset cost Depreciable cost Depreciation rate Depreciation expenses Acccumulated depreciation Book value 1/2/2016 $        21,000 12/31/2016 $        18,000 10% $        1,800 $                    1,800 $        19,200 12/31/2017 $        18,000 30% $        5,400 $                    7,200 $        13,800 12/31/2018 $        18,000 40% $        7,200 $                 14,400 $          6,600 12/31/2019 $        18,000 20% $        3,600 $                 18,000 $          3,000 Double declining balance method Date Asset cost Depreciable cost Depreciation rate Depreciation expenses Acccumulated depreciation Book value 1/2/2016 $        21,000 12/31/2016 $        18,000 50% $     10,500 $                 10,500 $        10,500 12/31/2017 $        18,000 50% $        5,250 $                 15,750 $          5,250 12/31/2018 $        18,000 50% $        2,250 $                 18,000 $          3,000 12/31/2019 $        18,000 50% $               -   $                 18,000 $          3,000 Requirement 2 Use of asset method tracks the wear and tear more closely as it is related to use of asset.

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