Bookmarks Q ESCI 111 Quiz 10F E9-7 Computing Depreciation under Alternative Meth

Question

Bookmarks Q ESCI 111 Quiz 10F E9-7 Computing Depreciation under Alternative Methods [LO 9-3] Sonic Corporation purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $27,000. The equipment has an estimated residual value of $1,500. The equipment is expected to process 255,000 payments over its three-year useful life. Per year, expected payment transactions are 61,200, year 1: 140,250, year 2, and 53,550, year 3. Required: Complete a depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.) 1. Straight-line. Income Statement Balance Sheet Depreciation Expense Accumulated Depreciation Book Value Year Cost At acquisition 2. Units-of-production. Balance Sheet Statement Depreciation Expense Accumulated Book Value Depreciation Year Cost At acquisition

Explanation / Answer

Depreciation schedule :

1) Straight line method :

Unit of production method :

Dep rate = (27000-1500)/255000 = 0.10 per process :

Double decline method :

Straight line rate = 100/3 = 33.33%

Double decline rate = 33.33*2=66.67%

Income statement Balance sheet Year depreciation expenses cost accumlated depreciation Book value At acquisition 1 8500 27000 8500 18500 2 8500 27000 17000 10000 3 8500 27000 25500 1500

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