Computing Depreciation Using Various Depreciation Methods

To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are used for equipment purchased on January 1 of the current year.

Cost and residual value		Estimated service life:
Acquisition cost	$17,500	Years	5
Residual value	$700	Service hours	14,000
		Productive output (units)	33,600

Required

Compute annual depreciation using each of the following methods.

a. Straight-line depreciation: Compute the depreciation rate and amount for each year. Note:Enter the rate in decimal form (such as 0.10) and not as a percentage.

Depreciation Rate

Answer

	Year 1	Year 2	Year 3	Year 4	Year 5
Depreciation Expense	Answer	Answer	Answer	Answer	Answer

b.Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount of depreciation expense for the first year assuming 3,080 service hours of actual operation.

Depreciation rate per service hour

Answer

	Year 1
Depreciation Expense	Answer

c.Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount of depreciation expense for the first year assuming 5,600 units of output.

Depreciation rate per unit

Answer

	Year 1
Depreciation Expense	Answer

d. Sum-of-the-years-digits method: Compute the depreciation amount for each year.

Year 1	Year 2	Year 3	Year 4	Year 5
Answer	Answer	Answer	Answer	Answer

e. Double-declining-balance method: Compute the depreciation amount for each year.

Year 1	Year 2	Year 3	Year 4	Year 5
Answer	Answer	Answer	Answer	Answer