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Chapter 10 Homework Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 87,000 X Year 2 %24 87,000 Year 3 87,000 Year 4 b. Units-of-activity method Year Amount Year 1 $ 108,750 Year 2 79,750 V Year 3 58,000 Year 4 14,500 c. Double-declining-balance Method Year Amount Year 1 $ 179,982 x Year 2 %24 59,998 X Year 3 %24 19,994 Year 4 6,664 Feedback Check My Work a. Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. b. Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours). c. The double-declining rate is two times the straight-line rate. Book value is the asset cost minus accumulated depreciation. Compare the total depreciation for all methods over the time period. Recall that straight-line depreciation allocates the depreciable cost of the asset equally over the period of use, while double-declining method is an accelerated method.

Chapter 10 Homework Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 87,000 X Year 2 %24 87,000 Year 3 87,000 Year 4 b. Units-of-activity method Year Amount Year 1 $ 108,750 Year 2 79,750 V Year 3 58,000 Year 4 14,500 c. Double-declining-balance Method Year Amount Year 1 $ 179,982 x Year 2 %24 59,998 X Year 3 %24 19,994 Year 4 6,664 Feedback Check My Work a. Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. b. Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours). c. The double-declining rate is two times the straight-line rate. Book value is the asset cost minus accumulated depreciation. Compare the total depreciation for all methods over the time period. Recall that straight-line depreciation allocates the depreciable cost of the asset equally over the period of use, while double-declining method is an accelerated method.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 20E: (Appendix 11.1) Depreciation for Financial Statements and Income Tax Purposes Dinkle Company...
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Chapter 10 Homework Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 87,000 X Year 2 %24 87,000 Year 3 87,000 Year 4 b. Units-of-activity method Year Amount Year 1 $ 108,750 Year 2 79,750 V Year 3 58,000 Year 4 14,500 c. Double-declining-balance Method Year Amount Year 1 $ 179,982 x Year 2 %24 59,998 X Year 3 %24 19,994 Year 4 6,664 Feedback Check My Work a. Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. b. Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours). c. The double-declining rate is two times the straight-line rate. Book value is the asset cost minus accumulated depreciation. Compare the total depreciation for all methods over the time period. Recall that straight-line depreciation allocates the depreciable cost of the asset equally over the period of use, while double-declining method is an accelerated method.
Transcribed Image Text:Chapter 10 Homework Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method. Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar. a. Straight-line method Year Amount Year 1 87,000 X Year 2 %24 87,000 Year 3 87,000 Year 4 b. Units-of-activity method Year Amount Year 1 $ 108,750 Year 2 79,750 V Year 3 58,000 Year 4 14,500 c. Double-declining-balance Method Year Amount Year 1 $ 179,982 x Year 2 %24 59,998 X Year 3 %24 19,994 Year 4 6,664 Feedback Check My Work a. Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. b. Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours). c. The double-declining rate is two times the straight-line rate. Book value is the asset cost minus accumulated depreciation. Compare the total depreciation for all methods over the time period. Recall that straight-line depreciation allocates the depreciable cost of the asset equally over the period of use, while double-declining method is an accelerated method.
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