Depreciation by Three Methods; Partial Years Perdue Company purchased equipment
ID: 2562435 • Letter: D
Question
Depreciation by Three Methods; Partial Years
Perdue Company purchased equipment on April 1 for $62,370. The equipment was expected to have a useful life of three years, or 4,320 operating hours, and a residual value of $1,890. The equipment was used for 800 hours during Year 1, 1,500 hours in Year 2, 1,300 hours in Year 3, and 720 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 multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
a. Straight-line method Year Year 1 Year 2 Year 3 Year 4 Amount 15,120 20,160 20,160 20,160X b. Units-of-output method Year Year 1 Year 2 Year 3 Year 4 Amount 11,200 21,000 18,200 10,080 c. Double-declining-balance method Year Year 1 Year 2 Year 3 Year 4 Amount 30,240.0 X 40,320.0X 40,320.0 X 40,320.0XExplanation / Answer
The correction is as follows:
A.
According to straight line method :
Depreciation in year 4 is only for 3 months so =20160×3/12=$5,040
C .
Double declining method:
Rate=200%/3=66.6667%
50%
(66.6667%×9/12)
$31,285
(62370×50%)
$31,185
$31,185
(62370-31185)
$20,790
$51,975
(20790+31185)
$10,395
(31185-20790)
16.67%
(66.6667%×3/12)
Year. book value year start depreciation % depreciation expense accumulated depreciation book value year end Year1. $62,37050%
(66.6667%×9/12)
$31,285
(62370×50%)
$31,185
$31,185
(62370-31185)
Year 2 $31,185 66.6667%$20,790
$51,975
(20790+31185)
$10,395
(31185-20790)
Year 3 $10,395 66.6667% $6930 $58,905 $3,465 Year 4 $3,46516.67%
(66.6667%×3/12)
$578 $59,,483 $2,888Related Questions
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