PR 9-3B Depreciation by three methods; partial years X EXCEL TEMPLATE Obj. 2 Layton Company purchased tool sharpening equipment on October 1 for $108,000. The equipment was expected to have a useful life of 12,000 operating hours, and a residual value of $7,200. The equipment was used for 1,350 hours during Year 1, 4,200 hours in Year 2,3,650 hours in Year 3, and 2,800 hours in Year 4. Instructions Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4 by (A) the straight-line method, (B) the units of activity method, and (C) the double declining balance method. Answer K M A C G 9 Answers are entered in the cells with gray backgrounds. 10 Cells with non-gray backgrounds are protected and cannot be edited. 11 An asterisk (*) will appear to the right of an incorrect entry 12 13 14 15 Depreciation Expense 16 A. B. 17 Straight Units of 18 Year Line Activity 19 20 1 21 2 22 3 23 4 24 Totals 25 26 Calculations: 27 28 Straight line method: 29 C. Double Declining- Balance For full year: Calculations: 26 27 28 29 Straight line method: For full year: (Cost Residual Value) 1 Years Yearly Depreciation 30 31 SZ 33 34 35 For part Year 1: Yearly Depreciation x Portion of Year Depreciation For part Year 4: Yearty Depreciation x Portion of Year Depreciation 36 37 38 39 40 41 42 43 44 45 Units-of-activity method: (Cost Residual Value) 1 Total Hours Rate Rate x Hours Yearly Depreciation Year 1 J L M F G A B D Rate Hours Yearly Depreciation Year 1 Year 2 Year 3 Year 4 43 44 45 46 47 48 49 50 51 52 53 54 55 Yearly Depreciation Double-declining balance method: Depreciable Balance Rate Portion of Year = Year 1 Year 2 Year 3 Since depreciation cannot cause book value to fall below residual value Depreciable Residual Balance Value Yearly Depreciation Year 4 56 57 58 59 60 61 Pr. 9-3B