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Correct the wrong answer, watch carefully, thank you Pharoah Company purchased equipment on March 27, 2018, at a cost of $264,000. Management is contemplating the
Correct the wrong answer, watch carefully, thank you
Pharoah Company purchased equipment on March 27, 2018, at a cost of $264,000. 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: 15,000 units in 2018; 20,200 units in 2019; 19,800 units in 2020; 20,000 units in 2021; and 5,000 units in 2022. Pharoah has a December year end. Your answer is partially correct. Try again. Prepare separate depreciation schedules for the life of the equipment using: (Round depreciation per unit to 2 decimal places, e.g. 5.28 and final answers to 0 decimal places, e.g. 5,275.) Straight-line method: Depreciable Year Amount Depreciation Accumulated Expense Depreciation Carrying Amount 264000 2018 256000 48000 48000 216000 2019 208000 64000 112000 152000 X 2020 144000 64000 176000 88000 x 2021 80000 64000 240000 24000 x 2022 16000 16000 256000 8000 Double-diminishing-balance method: Opening Carrying Amount Depreciation Accumulated Expense Depreciation Carrying Amount Year 264000 2018 264000 99000 99000 165000 x 2019 165000 825000 181500 825000 2020 82500 41250 222750 41250 2021 41250 20625 243375 20625 x X 2022 20625 2578 245953 18047 Units-of-production method: Depreciation Accumulated Expense Depreciation Carrying Amount Year Units-of-Production 264000 2018 15000 48000 48000 216000 2019 20200 64640 112640 151360 2020 19800 63360 176000 88000 M 2021 20000 64000 240000 24000 2022 5000 16000 256000 8000 Your answer is partially correct. Try again. Compare the total depreciation expense and accumulated depreciation under each of the three methods over the life of the equipment. (Round answers to o decimal places, e.g. 5,275.) Straight-Line Units-of-Production Double-Diminishing-Balance Total depreciation expense 256000 256000 245953 x Accumulated depreciation 256000 256000 245953Step by Step Solution
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