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Depreciation Methods Lord Company purchased a machine on January 2, 2019, for $70,000. The machine had an expected residual value of $10,000, an expected life of 8 years or 24,000 hours, and a capacity to produce 100,000 units. During 2019, Lord produced 12,000 units in 2,500 hours. In 2020, Lord produced 15,000 units in 3,000 hours. Required: 1. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value of the asset at the end of 2019 and 2020 for each of the following methods (round your answers to the nearest dollar): a. straight-line method b.activity method base on hours worked c. activity method based on units of output d.sum-of-the-years’-digits method e. double-declining-balance method 2. Next Level Under what conditions would it be appropriate to use each of the depreciation methods discussed above?

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

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Chapter
Section
Chapter 11, Problem 2P
Textbook Problem

Depreciation Methods Lord Company purchased a machine on January 2, 2019, for $70,000. The machine had an expected residual value of $10,000, an expected life of 8 years or 24,000 hours, and a capacity to produce 100,000 units. During 2019, Lord produced 12,000 units in 2,500 hours. In 2020, Lord produced 15,000 units in 3,000 hours.

Required:

  1. 1. Prepare a schedule showing depreciation expense for 2019 and 2020 and the book value of the asset at the end of 2019 and 2020 for each of the following methods (round your answers to the nearest dollar):
    1. a. straight-line method
    2. b.activity method base on hours worked
    3. c. activity method based on units of output
    4. d.sum-of-the-years’-digits method
    5. e. double-declining-balance method
  2. 2. Next Level Under what conditions would it be appropriate to use each of the depreciation methods discussed above?

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Chapter 11 Solutions

Intermediate Accounting: Reporting And Analysis
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