10-2B 10-3B 10-4B Comparing three depreciation methods Waylander Coatings Compan

Question

10-2B 10-3B 10-4B

Comparing three depreciation methods Waylander Coatings Company purchase waterproofing equipment on January 6, 2015. for $320,000. The equipment was expected to have a useful life of four years, 20,000 operating hours, and a residual value of $35,000. The equipment was used for 7,200 hours during 2015, 6,400 hours in 2016, 4,400 hours in 2017, and 2,000 hours in 2018. Instructions 1. Determine the amount of depreciation expense for the years ended December 31, 2015, 2016, 2017, and 2018, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:

Explanation / Answer

This Question contains three different question, so I am going to answer 10 - 2B, for rest pls. post different query for each 2 question

Solution 10 - 2 B

2. for 2015 Doble Declining method yeilds highest depreciation

3. Again Double declining method yeild highest Depeciation in total as well

Depreciable Amount = Cost of Equipement - Salvage value

= 320,000 - 35,000

= 285,000

1. Staight line method = Depreciable amount / useful life

= 285,000 / 4

= 71,250 each year

2. unit of output method

= no. of hr of operation during year x depreciable amount / total operating hours

3. Double Dicling method

here we calculate rat eof depreciation & then apply to opening book value

Depreciation rate = (1/useful life) x 200%
= 1/4 x 200% = 25% x 2 = 50%

Year Staight Line Unit of Output Double Decling 2015            71,250              1,02,600               1,60,000 2016            71,250                 91,200                   80,000 2017            71,250                 62,700                   40,000 2018            71,250                 28,500                   20,000 Total        2,85,000              2,85,000               3,00,000

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