Use the following information to answer questions 22 and 23. Servco purd $80,000

Question

Use the following information to answer questions 22 and 23. Servco purd $80,000. The copi purchases a color copier on January 1, 2014 for $4,000. ier has an estimated life of 5 years or 1,500,000 copies. The residual value is estimated to be to be recorded only for 2017, using the straight-line method-calculate the amount and 22- The amount of depreciation to be recorded onl make the journal entry in good form. 23. What is the amount of depreciation to be recorded for 201-z 135,000 copies are made. No jounal entry is 20 reciation to be recorde d for 2017 using the activity-based method and assuming that

Explanation / Answer

Colour copier purchased on 1-Jan-14 colour copier purchased for $80,000 Life 5 years Residual value $4,000 Estimated activity in life time 1500000 copies 22) Calculation of depreciation for 2017 using straight line method Depreciable cost $76,000 (cost minus residual life) Straight line depreciation per year $15,200 divide by life of 5 years Hence depreciation for Year 2017 shall be $15,200 23) Calculation of depreciation for 2017 using activity based method Depreciable cost $76,000 (cost minus residual life) total copies expected during life time 1500000 copies depreciation per copy $0.05 total copies made during year 2017 135000 copies Hence depreciation for Year 2017 shall be $6,840

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