Depreciation Methods Clearcopy, a printing company, acquired a new press on Janu

Question

Depreciation Methods Clearcopy, a printing company, acquired a new press on January 1, 2019. The press cost $171,600 and had an expected life of 8 years or 4,500,000 pages and an expected residual value of $15,000. Clearcopy printed 691,600 pages in 2019. Do not round intermediate calculations. If required, round your answers to the nearest whole dollar.

Required: 1. Compute 2019 depreciation expense using the: 2019 a. Straight-line method $ b. Double-declining-balance method $ c. Units-of-production method $ 2. What is the book value of the machine at the end of 2019 under each method? Book Value a. Straight-line method $ b. Double-declining-balance method $ c. Units-of-production method $

Explanation / Answer

1. Calculate 2019 depreciation :

a) Striaght line method = (original cost-salvage value)/useful life

= (171600-15000)/8

Straight line dep = 19575

depreciation for 2019 is 19575

b) Double decline balance method :

straight line rate = 100/8 = 12.5%

double decline rate = 12.5*2= 25%

Depreciation for 2019 = 171600*25% = 42900

c) Unit of production method = (original cost-salvage value/estimated production

= (171600-15000)/4500000

Unit of production method = 0.0348 per page

Depreciation for 2019 = (691600*0.0348) = 24067.68

2) What is the book value of the machine at the end of 2019 under each method

Method cost depreciation expenses Book value Straight line 171600 19575 152025 Double decline balance 171600 42900 128700 Unit of production 171600 24067.68 147532.32

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