a. Straight-line method Year Amount Year 1 20,790 V Year 2 27,720 Year 3 27,720 Year 4 6,930 b. Units-of-activity method Year Amount Year 1 15,400 Year 2 29,400 Year 3 25,200 Year 4 13,160 c. Double-declining-balance method Year Amount Year 1 42,795 X Year 2 28,530 Year 3 9,510 X Year 4 %24 %24 %24

Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter27: Lean Principles, Lean Accounting, And Activity Analysis
Section: Chapter Questions
Problem 27.20EX
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!! WHY IS IT WRONG? !!

Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $85,590. The equipment was expected to have a useful life of three years, or 5,940 operating hours, and a residual value of $2,430. The equipment was used for 1,100 hours during Year 1, 2,100 hours in Year 2, 1,800 hours in Year 3, and 940 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) the units-of-activity method, and (c) the double-declining-balance method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method
Year
Amount
Year 1
20,790 V
Year 2
27,720
Year 3
27,720
Year 4
6,930
b. Units-of-activity method
Year
Amount
Year 1
15,400
Year 2
29,400
Year 3
25,200
Year 4
13,160
c. Double-declining-balance method
Year
Amount
Year 1
42,795 X
Year 2
28,530
Year 3
9,510 X
Year 4
%24
%24
%24
Transcribed Image Text:a. Straight-line method Year Amount Year 1 20,790 V Year 2 27,720 Year 3 27,720 Year 4 6,930 b. Units-of-activity method Year Amount Year 1 15,400 Year 2 29,400 Year 3 25,200 Year 4 13,160 c. Double-declining-balance method Year Amount Year 1 42,795 X Year 2 28,530 Year 3 9,510 X Year 4 %24 %24 %24
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