On March 31, 2021, Canseco Plumbing Fixtures purchased equipment for $38,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The company expects the equipment to operate for 10,000 hours. The equipment operated for 2,600 and 3,400 hours in 2021 and 2022, respectively. Required: a.- calculate depreciation expense for 2021 and 2022 using straight-line-method. b.- Calculate depreciation expense for 2021 and 2022 using double-declining-balance method. c.- Calculate depreciation expense for 2021 and 2022 using units-of-production using hours operated. Complete this question by entering your answers in the tabs below Required A Required B Required C Calculate depreciation expense for 2021 and 2022 using straight-line method.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On March 31, 2021, Canseco Plumbing Fixtures purchased equipment for $38,000. Residual value at the end of an estimated four-year service life is expected to be $2,000. The company expects the equipment to operate for 10,000 hours. The equipment operated for 2,600 and 3,400 hours in 2021 and 2022, respectively.
Required:
a.- calculate
b.- Calculate depreciation expense for 2021 and 2022 using double-declining-balance method.
c.- Calculate depreciation expense for 2021 and 2022 using units-of-production using hours operated.
Complete this question by entering your answers in the tabs below
Required A Required B Required C
Calculate depreciation expense for 2021 and 2022 using straight-line method.
Straight-Line Depreciation
Choose Numerator: / Choose Denominator: = Annual depreciation
Expense
Formula / =
Amounts / =
Year Annual Depreciation x Fraction of Year = Depreciation expense
2021
2022
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