Questions 6-7 lof 7 [The following information applies to the questions displaye

Question

Questions 6-7 lof 7 [The following information applies to the questions displayed below] Nicole's Getaway SpeNGS) purchased hydrotherapy tub system to add to the wellness programs et NGs. The machine wes purchased at the beginning of the year at a cost of $15.500. The estimated useful life was five years and the residual velue was $1,500. Assume that the estimated productive life of the machine is 10.000 hours. Expected annual production was yeor 1, 2.350 hours: year 2, 2,500 hours: year 3, 2.050 hours; year 4, 2.100 hours; and year 5,1,000 hours 3.00 points Required: 1. Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.Round your final answers to the nearest dollar amount.) a. Straight-line Year At Acquisition Year 1 Year 2 Year 3 Year 4 Year 5 Book Value Unts-ofproduction. Year Depreoiation Accumu ExpenseDepreciation Bookv

Explanation / Answer

1.

Cost = 15,500

Useful life = 5 years

Residual value = 1,500

a. Depreciation under Straight line method = (cost - residual value) / useful life

= (15,500 - 1,500) / 5

= 2,800

b. Units of production.

Depreciation under units of production method = (cost - residual value) * units this year / total estimated units

c. Double-declining balance.

Depreciation under Double declining balance method = (cost - accumualted deprectaion) / useful life * 2

(*) Under double declining balance method, depreciation cannot be made below salvage value.

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2.

Year Depreciation expense Accumulated depreciation Book value At acquision Year 1 2,800 2,800 12,700 Year 2 2,800 5,600 9,900 Year 3 2,800 8,400 7,100 Year 4 2,800 11,200 4,300 Year 5 2,800 14,000 1,500

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