Safari File Edit View History Bookmarks Window Help Gmail - inbo.. for $21,300.

Question

Safari File Edit View History Bookmarks Window Help Gmail - inbo.. for $21,300. Residual value at the end of an estimated The following information applies to the questions displayed below] University Car Wash $186,000 including installation. The company estimates that the equipment will have a residual value of built a deluxe car wash across the street from campus. The new machines cost $15,000. University Car Was Actual use per year was as follows: h also estimates it will use the machine for six years or about 15,000 total hours Hours used 2,500 2,700 3,000 2,600 2,300 1,900 value 10.00 points 1. Prepare a depreciation schedule for six years using the straight-ine method. (Do not round intermediate calculations. Round your answers to the nearest dollar amount. your response.) ate calculations. Round your answers to the nearest dollar amount. Omit the "$" sign in UNIVERSITY CAR WASH Calculation End of year amounts Accumulated Cost Expense Book Value Total References eBook&Resources;

Explanation / Answer

1.

CALCULATION : STRAIGHT LINE METHOD = COST OF MACHINE - SALVAGE VALUE / NUMBER OF YEARS

Therefore = 188000 - 15000 / 6 = 28833.33

2.

CALCULATION: DOUBLE DECLINING METHOD = in this method the depreciation rate is taken double to that of the "Straight Line Method" . Therefore the double of 15.34 is 30.68 which is the depreciation rate for the double declining method. The depreciation is calculated on the book value of the asset every year unlike in straight line method where depreciation is calculated on the cost of the asset every year. Thus it will have an impact of Higher Depreciation expenses in the early years and lower depreciation expense in the later years.

3.

CALCULATION : ACTIVITY BASED DEPRECIATION = Cost of Machine - Salvage value of the Machine

                                                                                                  Total Hours

= 188000 - 15000 / 15000 = 11.53

This 11.53 is multiplied with the Actual hours used per year this will provide us the depreciation expense for the year.

DEPRECIATION SCHEDULE FOR SIX YEARS USING THE STAIGHT LINE METHOD YEAR DEPRECIABLE COST $ DEPRECIATION RATE DEPRECIATION EXPENSE $ ACCUMULATED DEPRECIATION $ BOOK VALUE $ 1 188000 15.34 / 100 28833.33 28833.33 159166.67 2 188000 15.34 / 100 28833.33 57666.66 130333.34 3 188000 15.34 / 100 28833.33 86499.99 101500.01 4 188000 15.34 / 100 28833.33 115333.32 72666.68 5 188000 15.34 / 100 28833.33 144166.65 43833.35 6 188000 15.34 / 100 28833.33 172999.98 15000.02 1128000 172999.98

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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