Ookden Fried Chicken bought equipment on Jenuary 2,208, for $39,000. The equipme
ID: 2514864 • Letter: O
Question
Ookden Fried Chicken bought equipment on Jenuary 2,208, for $39,000. The equipment was expected lo remain in service for four yeans and to operate for 11,000 hours At the end ol the equipments useful lie, Golden estimates that its value will be S6,000. The equipment operaled for 1,100 hours the at year 3,300 hours te seoond year, 4,400 hours the thind year, and 2,200 hours the fourth year Read the reauinements value per year for the equipment under the these depreciation methods: straight ine, units-of production, and Three degreclation schedules must be prepared legin by preparing a depreciation schedule usling the stralight-line method Straight-Line Deprecia ion Schedule the Year Asset DepreclableDepreclation Expense DepreciationValus 1-2018 12-31-208 12-31-2019 12-31-2020 12-31-2021 experse per unt Select the fomula, then enter the amounts and caloulate the depreciation expense per unit )7 Prepare a dapreciation schedule using the Choose from any list or enter any number in th innut rrExplanation / Answer
Solution 1:
Original cost = $39,000
Salvage value = $6,000
Depreciable cost = $39,000 - $6,000 = $33,000
Life = 4 years
Annual Depreciation SLM = $33,000 / 4 = $8,250
Depreciation rate SLM = $8250/$33,000 = 25%
Depreciation rate - DDB = 25%*2 = 50%
Unit of production method:
Depreciable cost = $33,000
Estimated operating hours = 11000 hours
Depreciation per hour = $33,000 / 11000 = $3 per hour
Double Declining balance method:
Solution 2:
The double declining balance method track the wear and tear more closely.
Depreciation Schedule - SLM Date Asset Cost Depreciable Cost Depreciation Rate Depreciation Expense for the year Accumulated Depreciation Book Value 2-Jan-18 $39,000.00 31-Dec-18 $33,000.00 25% $8,250.00 $8,250.00 $30,750.00 31-Dec-19 $33,000.00 25% $8,250.00 $16,500.00 $22,500.00 31-Dec-20 $33,000.00 25% $8,250.00 $24,750.00 $14,250.00 31-Dec-21 $33,000.00 25% $8,250.00 $33,000.00 $6,000.00Related Questions
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