Purity Ice Cream Company bought a new ice cream maker at the beginning of the ye

Question

Purity Ice Cream Company bought a new ice cream maker at the beginning of the year at a cost of $20,000. The estimated useful life was four years, and the residual value was $2,180. Assume that the estimated productive life of the machine was 9,900 hours. Actual annual usage was 3,960 hours in year 1; 2,970 hours in year 2; 1,980 hours in year 3; and 990 hours in year 4

Complete a separate depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.)

Straight-line.

Units-of-production (use four decimal places for the per unit output factor)

Double-declining-balance.

.

Complete a separate depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.)

Straight-line.

Year Depreciation Expense Accumulated Expense Net Book Value At acquisition 1 2 3 4

Units-of-production (use four decimal places for the per unit output factor)

Year Depreciation Expense Accumulated Expense Net Book Value At acquisition 1 2 3 4

Double-declining-balance.

Year Depreciation Expense Accumulated Expense Net Book Value At acquisistion 1 2 3 4

Explanation / Answer

Depreciable amount = 20,000-2180 = 17820 annual depreciation using streightline method = 17820/4 = $4,455 Depreciation per hour = 17820/9900=1.8 %age of Depreciation under streight line method = 1/4 = 25% So, %of depreciation under double declining method = 2 * 25% = 50% Straight-line. Year Depreciation Expense Accumulated Expense Net Book Value At acquisition 1 4455 4455 15545 2 4455 8910 11090 3 4455 13365 6635 4 4455 17820 2180 Units-of-production (use four decimal places for the per unit output factor) Year Depreciation Expense Accumulated Expense Net Book Value At acquisition 1 7128 7128 12872 2 5346 12474 7526 3 3564 16038 3962 4 1782 17820 2180 Double-declining-balance. Year Depreciation Expense Accumulated Expense Net Book Value At acquisistion 1 10000 10000 10000 2 5000 15000 5000 3 2500 17500 2500 4 1250 18750 1250

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