GMail 11:09 PM kings.mrooms2.net 26% alculation of Depreciation Exp ompany A pur
ID: 2567751 • Letter: G
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GMail 11:09 PM kings.mrooms2.net 26% alculation of Depreciation Exp ompany A purchased new equipment for $18,900 on June1, 2017. Other information is as follows had a useful life of 7 has a or 36,400 total hours to $9,800 at the end of its useful life valuc A uses the calendar vear as its fiscal year Instructions: PLEASE SHOW YOUR WORK. ompute the depreciation expense for 2017 and 2018 using the straight-line depreciation 2017 2018 2017 2018 The equipment was used for 9,100 total hours in 2017 and for 10,920 total hours in 2018. ompute the depreciation expense for 2017 and 2018 using the units-of production on method 2017 2018 2017 ompute the depreciation expense for 2017 and 2018 method 2017 2018 omputations: 2017 2018Explanation / Answer
a. Depreciation under Straight-line Method :
Annual depreciation = ( Cost - Salvage Value ) / Estimated Useful Life = $ ( 18,900 - 9,800) / 7 = $ 1,300.
Depreciation expense for 2017 ( Partial Year) : $ 1,300 x 7 / 12 = $ 758.
Depreciation expense for 2018 ( Full Year ) : $ 1,300.
b. Depreciation under the Units of Production Method :
Depreciation per hour = ( Cost - Salvage Value ) / Estimated Total Hours = $ ( 18,900 - 9,800 ) / 36,400 = $ 0.25
Depreciation expense for 2017 : 9,100 x $ 0.25 = $ 2,275
Depreciation expense for 2018 : 10,920 x $ 0.25 = $ 2,730.
c. Depreciation under the double declining balance method :
Double declining rate of depreciation = 100 / Estimated Useful Life * 2 = 100 / 7 * 2 = 28.57 %
Annual depreciation expense = Cost x Double Declining Rate.
Depreciation expense for 2017 = $ 18,900 x 28.57 % x 7/12 = $ 3,149.84
Depreciation Expense for 2018 = $ (2,249.89 + 2,249.93) = $ 4,499.82.
Year Depreciation : January 1 - May 31 Depreciation : June 1 - December 31 $ 2017 - 3,149.84 2018 18,900 x 28.57 % - 3,149.84 = $ 2,249.89 $ ( 18,900 - 3,149.84 - 2,249.89 ) x 28.57 % x 7/12 = $ 2,249.93Related Questions
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