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Jesse's Widgets purchased new equipment for a total amount of $575,000. The equipment is expected to last 8 years and have a residual/scrap/salvage value of
| Jesse's Widgets purchased new equipment for a total amount of $575,000. The equipment is expected to last 8 years and have a residual/scrap/salvage value of $55,000 at the end of that life. Usage of the equipment is tracked in machine hours and the equipment in total was initially predicted to last 75,000 hours, though they ended up exceeding that number in the final year. | |||||||||
| # of machine hours used each year (for units of production depreciation) | |||||||||
| Year | Hours | ||||||||
| 1 | 21,750 | ||||||||
| 2 | 13,000 | ||||||||
| 3 | 10,750 | ||||||||
| 4 | 0 | No hours used this year, due to shop renovations. | |||||||
| 5 | 11,250 | ||||||||
| 6 | 8,250 | ||||||||
| 7 | 7,750 | ||||||||
| 8 | 5,300 | ||||||||
| Total | 78,050 | ||||||||
| Requirements: Complete the depreciation schedule for Jesse's Widgets using each of the three depreciation methods (straight line, double-declining balance, and units of production.) | |||||||||
| A.) Straight Line Depreciation | |||||||||
| Year | Beginning Book Value | Annual Depreciation Percentage Rate | JOURNAL ENTRY - Depreciation Expense/Accumulated Depreciation | Ending Accumulated Depreciation Balance | Ending Book Value | ||||
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| B.) Double Declining Balance Depreciation | |||||||||
| Year | Beginning Book Value | Depreciation Rate (%) | JOURNAL ENTRY - Depreciation Expense/Accumulated Depreciation | Ending Accumulated Depreciation Balance | Ending Book Value | ||||
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| C.) Units of Production Depreciation | |||||||||
| Year | Beginning Book Value | Depreciation Rate Per Unit (round to $x.xx.) | # of hours used this year | JOURNAL ENTRY - Depreciation Expense/Accumulated Depreciation | Ending Accumulated Depreciation Balance | Ending Book Value | |||
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Step by Step Solution
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There are 3 Steps involved in it
Step: 1
A Straight Line Depreciation To calculate straightline depreciation we need to determine the annual depreciation expense and update the book value each year The formula for straightline depreciation i...
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077614041, 9780077446475, 77614046, 007744647X, 77647092, 978-0077647094
