Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Company purchased equipment on March 27, 2018, at a cost of $272.000. Management is contemplating the merits of using the diminishing-balance or units-of-production method

image text in transcribed
image text in transcribed
Blossom Company purchased equipment on March 27, 2018, at a cost of $272.000. Management is contemplating the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $8,000 and an estimated useful life of either four years or 80,000 units. Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14.200 units in 2018: 20.400 units in 2019: 20.400 units in 2020: 20,000 units in 2021; and 5,000 units in 2022. Blossom has a December year end. - Your answer is partially correct. Prepare separate depreciation schedules for the life of the equipment using:(Round depreciation per unit to 2 decimal places, eg. 5.28 and final answers to decimal places, eg. 5,275) Straight-line method: Depreciable Amount Depreciation Expense Accumulated Depreciation Carrying Amount Year 272000 2018 $ 264000 $ 49500 49500 222500 2019 264000 66000 115500 156500 264000 66000 181500 90500 2020 2021 2022 264000 66000 247500 24500 264000 16500 264000 8000 Double-diminishing balance method: Opening Carrying Amount Dean Year lunt Depreciation Expense Accumulated Depreciation Carrying Amount 272000 272000 109500 109500 182500 182500 91250 200750 91250 2018 $ 2019 2020 2021 2022 91250 45625 246375 45625 45625 269188 22812 18812 264000 8000 Units-of-production method: Year Units-of-Production Depreciation Expense Accumulated Depreciation Carrying Amount 272000 2018 2019 2020 2021 2022 e Textbook and Media X Your answer is incorrect. Compare the total depreciation expense and accumulated depreciation under each of the three methods over the life of the equipment. (Round answers to decimal places, es 5,275) Straight-Line Units-of-Production Double-Diminishing-Balance Total depreciation expense $ Accumulated depreciation

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Employment, Hours, And Earnings 2010 States And Areas

Authors: Sarah E. Baltic

5th Edition

1598884190, 9781598884197

More Books

Students also viewed these Accounting questions

Question

What styles do they use?

Answered: 1 week ago

Question

create a semiotic sign system to communicate an idea.

Answered: 1 week ago

Question

apply research strategies to writing.

Answered: 1 week ago