Problem 9-4A a-b widhorse Co purchased equipment on March 27, 2018, at a cost of

Question

Problem 9-4A a-b widhorse Co purchased equipment on March 27, 2018, at a cost of $264,000. Management is contemplating the merits of using the diminishing-balance or units-of-production methed of depreciation instead of the straight-line method, which iR currently uses for other equipment. The new equipment has an estimated residual value of $8,000 and an estimated useful fe of ether four years or 8o,000 units. Demand for the produts produced by e equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment preduces the following number of units each year: 14,600 units in 2018 20,600 units in 2019; 19,80o units in 202 20,000 unts in 2021; and 5,000 units in 2022 wadhorse has December year e d Prepare separete ecaten seheddes for the Me of the equipment using: (Round depreciation per unit te 2 decimal places, e. s.38 and final answers to O decimal places,·g·s,275.) Straight-line method Year Cost 264,000 201256,0004,064000 192,000 2019 192,0004,00128,000 12,000 2020 2021 022

Explanation / Answer

a) Straight line method = (cost - salvage value)/Life(yrs) Year Cost (a) Depreciable Value Depreciation Accumulated Depreciation (b) Book Value (a-b) Calculation 2018 $264,000 $256,000 $51,200 $51,200 $212,800 ($256000/5) 2019 $264,000 $256,000 $51,200 $102,400 $161,600 ($256000/5) 2020 $264,000 $256,000 $51,200 $153,600 $110,400 ($256000/5) 2021 $264,000 $256,000 $51,200 $204,800 $59,200 ($256000/5) 2022 $264,000 $256,000 $51,200 $256,000 $8,000 ($256000/5) b) Unit of prodcution= (cost - salvage value)*No. of Unit prodcued/ Total Capacity Year Cost (a) Depreciable Value Depreciation Accumulated Depreciation (b) Book Value (a-b) Calculation 2018 $264,000 $256,000 46720 $46,720 $217,280 (256000*14600/80000) 2019 $264,000 $256,000 65920 $112,640 $151,360 (256000*20600/80000) 2020 $264,000 $256,000 63360 $176,000 $88,000 (256000*19800/80000) 2021 $264,000 $256,000 64000 $240,000 $24,000 (256000*20000/80000) 2022 $264,000 $256,000 16000 $256,000 $8,000 (256000*5000/80000) C). Double Decline Method = Carrying value * (straight rate * 2) Year Cost (a) Depreciable Value Depreciation Accumulated Depreciation (b) Book Value (a-b) Calculation 2018 $264,000 $264,000 $105,600 $105,600 $158,400 (264000*0.20*2) 2019 $264,000 $158,400 $63,360 $168,960 $95,040 (158400*0.20*2) 2020 $264,000 $95,040 $38,016 $206,976 $57,024 (95040*0.20*2) 2021 $264,000 $57,024 $22,810 $229,786 $34,214 (57024*0.20*2) 2022 $264,000 $34,214 $13,686 $243,471 $20,529 (34214*0.20*2) Straight Line Unit of Production DDb Total Depreciation expense 256000 256000 $243,471 Accumulated Depreciation 256000 256000 $243,471

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.