chased and installed electronic payment equipment at its drive-in restaurants in

Question

chased and installed electronic payment equipment at its drive-in restaurants in San Tails Corporation pur Marcos, TX, at a cost of $45,900. The equipment has an estimated residual value of $1,800. The equipment is expected to process 273,000 payments over its three-year useful life. Per year, expected payment transactions are 65,520, year 1;150,150, year 2; and 57,330, year 3 Required Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.) 1. Straight-line Income Balance Sheet Statement Depreciation Expense Accumulated Book Value Depreciation Year Cost At acquisition $ 45,900 14.700 $ 45.900$ 14,700($ 31,200 16,500 1,800 45,900 45,900 14,700 29,400 14,700 44,100 2. Units-of-production. Income Balance Sheet Statement Depreciation Expense Accumulated Book Value Depreciation Year Cost At acquisition $ 45,900 $10,584$ 45,900$0,584$ 35,316 24,255 35.316 9,261 3. Double-declining-balance Income Balance Sheet Statement Depreciation Expense AccumulatedBook Value Depreciation Year Cost At acquisition 3

Explanation / Answer

Req 1: SLM Basis Cost of Equipment    $ 45,900 Residual value             $ 1800 Estimated life                 3 years Depreciable cost (cost -salvage) = 45900-1800 =44100 Annual Depreciation =depreciable cost / life =44100 /3 = 14700 YEAR Depreciation Expense Cost Accumulated Depreciation Book value At Acquisition 45900 1 14700 45900 14700 31200 2 14700 45900 29400 16500 3 14700 45900 44100 1800 Units of production BASIS Depreciable cost = 44100 Estimated life   273,000 payments Depreciation per payment = 44100 /273,000 = 0.1615 per payment Depreciation for years: Year 1: 65520 paymenst @0.1615 = $ 10,581 Year 2: 150,150 payments @0.1615 = $ 24,249 Year 3: 57330 payments @0.1615 = $ 9259 YEAR Depreciation Expense Cost Accumulated Depreciation Book value At Acquisition 45900 1 10581 45900 10581 35319 2 24249 45900 34830 11070 3 9259 45900 44089 1811 Double declining Basis Rate of dep under SLM = Annual depreciation /Depreciable cost 14700/44100 = 33.33% Rate under double declining =33.33%*2 =66.67% YEAR Depreciation Expense Cost Accumulated Depreciation Book value At Acquisition rate 66.67% on Written down value 45900 1 30602 45900 30602 15298 2 10199 45900 40801 5099 3 3399 45900 44200 1700

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