University Car Wash built a deluxe car wash across the street from campus. The n
ID: 2492965 • Letter: U
Question
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $264,000 including installation. The company estimates that the equipment will have a residual value of $25,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year Hours Used 1 2,900 2 1,300 3 1,400 4 2,600 5 2,400 6 1,900
Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)
depreciation expense , accumulated depreciation, and book value
Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)
depreciation expense , accumulated depreciation, and book value
Explanation / Answer
Cost of Car $264,000 Residual Value $25,500 Yr Total Hrs 1 2,900 2 1,300 3 1,400 4 2,600 5 2,400 6 1,900 12,500 Depreciation /hr = Cost of car-scrap value/total hrs =($264000-25500)/12500hrs =$19.08/hr Depreciation Schedule Yr Opening WDV Depreciation [19.08$*no oh hrs] Closing WDV (Opening WDV-Dep) 1 $264,000 55,332.00 208,668.00 2 208,668.00 24,804.00 183,864.00 3 183,864.00 26,712.00 157,152.00 4 157,152.00 49,608.00 107,544.00 5 107,544.00 45,792.00 61,752.00 6 61,752.00 36,252.00 25,500.00
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