e Mary Jones Inc Rep /g Assignments SP18. NTFyDChapter 9 Home ork C | ezto.mhedu

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e Mary Jones Inc Rep /g Assignments SP18. NTFyDChapter 9 Home ork C | ezto.mheducation.com/hm.tpx x'QAccounting 1 chapter 9 ix: ACCOUNTING Chapter 9 Homework Question 9 (of 10) previous question value 1.00 points Calculate the amount of depreciation to report during the year ended December 31 for equipment that was purchased at a cost of $78,000 on October 1. The equipment has an estimated residual value of $3,000 and an estimated useful life of five years or 20,000 hours. Assume the equipment was used for 1,000 hours r 1 to December 31 and the company uses (a) straight-line, (b) double-declining-balance, or (c) units-of-production depreciation. (Do not round intermediate calculations.) Deprec (a) Straight-Line (b) Double-Declining-Balance (c) Units-of-Production References eBook &Resources; Worksheet DELL

Explanation / Answer

Straight line:

Cost of Equipment = $78,000
Residual Value = $3,000
Estimated Life = 5 years

Annual Depreciation = (Cost of Equipment - Residual Value) / Estimated Life
Annual Depreciation = ($78,000 - $3,000) / 5
Annual Depreciation = $15,000

Depreciation for the year = $15,000 * 3/12
Depreciation for the year = $3,750

Double declining balance:

Straight line Depreciation Rate = 1 / Useful Life
Straight line Depreciation Rate = 1 / 5
Straight line Depreciation Rate = 20%

Double declining Depreciation Rate = 2 * 20%
Double declining Depreciation Rate = 40%

Depreciation for the year = $78,000 * 40% * 3/12
Depreciation for the year = $7,800

Units of Production:

Cost of Equipment = $78,000
Residual Value = $3,000
Estimated Life =20,000 hours

Depreciation per hour = (Cost of Equipment - Residual Value) / Estimated Life
Depreciation per hour = ($78,000 - $3,000) / 20,000
Depreciation per hour = $3.75

Depreciation for the year = 1,000 * $3.75
Depreciation for the year = $3,750

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