Mama\'sMama\'s Fried Chicken bought equipment on JanuaryJanuary 22?, 20162016?,
ID: 2509018 • Letter: M
Question
Mama'sMama's
Fried Chicken bought equipment on
JanuaryJanuary
22?,
20162016?,
for
$ 18 comma 000$18,000.
The equipment was expected to remain in service for four years and to perform
3 comma 7503,750
fry jobs. At the end of the?equipment's useful? life,
Mama'sMama's
estimates that its residual value will be
$ 3 comma 000.$3,000.
The equipment performed
375375
jobs the first? year,
1 comma 1251,125
the second? year,
1 comma 5001,500
the third? year, and
750750
the fourth year.
Requirements
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.
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
Asset
Depreciable
Depreciation
Depreciation
Accumulated
Book
Date
Cost
Cost
Rate
Expense
Depreciation
Value
1-2-2016
$18,000
$18,000
12-31-2016
/
4 years
=
12-31-2017
/
=
12-31-2018
/
=
12-31-2019
/
=
Explanation / Answer
Answer
Straight-Line Depreciation Schedule
Depreciation for the Year
Asset
Depreciable
Depreciation
Depreciation
Accumulated
Book
Date
Cost
Cost
Rate
Expense
Depreciation
Value
01-02-2016
$ 18,000.00
$ 3,000.00
$ 18,000.00
12-31-2016
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 750.00
$ 17,250.00
12-31-2017
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 1,500.00
$ 16,500.00
12-31-2018
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 2,250.00
$ 15,750.00
12-31-2019
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 3,000.00
$ 15,000.00
Straight-Line Depreciation Schedule
Depreciation for the Year
Asset
Depreciable
Depreciation
Depreciation
Accumulated
Book
Date
Cost
Cost
Rate
Expense
Depreciation
Value
01-02-2016
$ 18,000.00
$ 3,000.00
$ 18,000.00
12-31-2016
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 750.00
$ 17,250.00
12-31-2017
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 1,500.00
$ 16,500.00
12-31-2018
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 2,250.00
$ 15,750.00
12-31-2019
$ 18,000.00
$ 3,000.00
/
4 years
=
$ 750.00
$ 3,000.00
$ 15,000.00
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