Granny's Fried Chicken bought equipment on January 2 2024 , , for $27,000 . The equipment was expected to remain in service for four years and to operate for 5250 hours. At the end of the equipment' useful life, Granny's estimates that its residual value will be $6000The equipment operated for 525 hours the first year, 1575 hours the second year, 2100 hours the third year, and 1050 hours the fourth year.
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2. Granny's Fried Chicken bought equipment on January 2, 2024. for $27.000. The equipment was expected to remain in service for four years and to operate for 5.250 hours. Ai the end of the equipment's useful life, Granny's estimates that its residual value will be $6,000. The equipment operated for 525 hours the first year, 1,575 hours the second year, 2,100 hours the third year, and 1,050 hours the fourth year. Read the requirements! Requirement 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Depreciation for the Year Asset Depreciable Useful Depreciation Accumulated Book Date Cost Cost Life Expense Depreciation Value 1-2-2024 S 27,000 S 27,000 12-31-2024 $ 21.000 4 years 4 S 5,250 S 5,250 21,750 12-31-2025 21,000 - 4 years = 5,250 10,500 16,500 12-31-2026 21.000 4 years 5,250 15,750 11,250 12-31-2027 21.000 4 years 5,250 21,000 6,000 = Before calculating the units-of-production depreciation schedule, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation expense per unit Cost Residual value Useful life in units = Depreciation per unit ($ 27,000 6.000 5.250 S 4 Prepare a depreciation schedule using the units-of-production method. Units-of-Production Depreciation Schedule Depreciation for the Year Asset Depreciation Number of Depreciation Accumulated Date Cost Per Unit Units Expense Depreciation 1-2-2024 S 27,000 $ 12-31-2024 $ 4 525 = S 2,100 $ 2,100 12-31-2025 4 x 6.300 12600 12-31-2026 2,100 = 8.400 25200 12-31-2027 1,050 4.200 16800 Book Value 27,000 24.900 1,575 = 22800 20700 18800 Prepare a depreciation schedule using the double-declining-balance (DDB) method. (Enter a "0" for any items with a zero value.) Double-Declining-Balance Depreciation Schedule Depreciation for the Year Asset Book DDB Depreciation Accumulated Book Date Cost Value Expense Depreciation Value Rate 1-2-2024 12-31-2024 X (1) 12-31-2025 (2) = 12-31-2026 12-31-2027 Requirement 2. Which method tracks the wear and tear on the equipment most closely? The (3) method tracks wear and tear most closely. 1: Requirements 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. Which method tracks the wear and tear on the equipment most closely? 2. (1) 5,250 (2) 5,250 (3) 2 x (1:4) 4 years 2 x (1:4) 4 years double-declining-balance straight-line units-of-production 4 years x 2 4 years * 2
