West Coast Tours runs boat tours along the west coast of British Columbia. On Ma
ID: 2609358 • Letter: W
Question
West Coast Tours runs boat tours along the west coast of British Columbia. On March 5, 2017, it purchased, with cash, a cruising boat for $894,000, having a useful life of 10 years or 16,725 hours with a residual value of $225,000. The company’s year-end is December 31.
Required:
Calculate depreciation expense for the fiscal years 2017, 2018, and 2019 by completing a schedule. (Note: Depreciation is calculated to the nearest month. Assume actual hours of service were: 2017, 830; 2018, 1,890; 2019, 1,645.)
Depreciation Method Year Straight-Line Double-Declining Balance Units-of-Production 2017 2018 2019
Explanation / Answer
Year Straight Double Units of line declining production 2017 55,750 149,000 33200 2018 66,900 149,000 75600 2019 66,900 119,200 65800 Straight line = (894000-225000)/10 66900 for first year dep will be for march to december 66900/12*10= 55750 Double Declining method 1/10*2= 0.2 or 20% 2017 894000*20%= 178800 *12/10= 149000 2018 (894,000-149,000)*20%= 149000 2019 (894000-149000*2)*20%= 119200 units of production depreciation rate = ( 894000-225000)/16725 40
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