Depreciation by Three Methods; Partial Years Layton Company purchased tool sharp
ID: 2524564 • Letter: D
Question
Depreciation by Three Methods; Partial Years
Layton Company purchased tool sharpening equipment on October 1 for $108,000. The equipment was expected to have a useful life of three years, or 12,000 operating hours, and a residual value of $7,200. The equipment was used for 1,350 hours during Year 1, 4,200 hours in Year 2, 3,650 hours in Year 3, and 2,800 hours in Year 4.
Required:
Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar.
a. Straight-line method
Year Amount
Year 1 $
Year 2 $
Year 3 $
Year 4 $
b. Units-of-output method
Year Amount
Year 1 $
Year 2 $
Year 3 $
Year 4 $
c. Double-declining-balance method
Year Amount
Year 1 $
Year 2 $
Year 3 $
Year 4 $
Explanation / Answer
Answer for a)
Depreciation under straight line method:
8600
[[($108000-$7200)/2]×3/12]
33600
[[($108000-$7200)/2]]
33600
[[($108000-$7200)/2]
25200
[[($108000-$7200)/2]×9/12]
Answer for b)
Units output method
11340
[(108000-7200)×1350 hours/12000]
35280
[($108000-7200)×4200/12000hours]
30660
[($108000-$7200)×3650 hours/12000hours]
23520
[($108000-$7200)×2800/12000 hours]
Answer for c)
Double declining method:
Rate of depreciation:1/3years×200%=66.67%
18001
[($108000×66.67%)×3/12]
60002
[($108000-18001]×66.67%]
19999
[($89999-60002)×66.67%]
2798
[($108000-7200)-$(18001-60002-19999)]
Particulars amount($) Year 18600
[[($108000-$7200)/2]×3/12]
Year 233600
[[($108000-$7200)/2]]
Year 333600
[[($108000-$7200)/2]
Year 425200
[[($108000-$7200)/2]×9/12]
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