Suppose ParcelPick purchased equipment on January 1, 2014, for $32000. The expected useful life of the equipment is 10 years or 150000 units of production, and its residual value is $2000. Under three depreciation methods, the annual depreciation expense and the balance of accumulated depreciation at the end of 2014 and 2015 are:

Method A

Method B

Method C

Annual

Annual

Annual

Depreciation

Accumulated

Depreciation

Accumulated

Depreciation

Accumulated

Year|

Expense

Depreciation

Expense

Depreciation

Expense

Depreciation

2014|

$3,000

$3,000

$6,400

$6,400

$400

$400

2015|

3,000

6,000

5,120

11,520

2,600

3,000

Requirement 1) Identify the depreciation method used in each instance, and show the equation and computation for each; round to the nearest dollar.

Begin by identifying the depreciation method used in each instance. (double-declining-balance, straight-line, unites-of-production)

Method A ___________

Method B ___________

Method C ___________

Now, select the equation and show the computation of depreciation under method A.

(_______-_______) / _______ = Method A depreciation

(_______-_______) / _______ = _______

Next, select the equation and show the computation of depreciation under method B. (enter any depreciation rate as a decimal to two places, .XX)

_______ x _______ = Method B depreciation

2014 _______ x _______ = _______

2015 _______ x _______ = _______

Finally, select the equation and show the computation of depreciation under Method C. (enter any depreciation rate as a decimal to two places, .XX)

_______ x _______ = Method C depreciation

2014 _______ x _______ = _______

2015 _______ x _______ = _______

Requirement 2) Assume continued use of the same method through year 2016. Determine the annual depreciation expense, accumulated depreciation, and book value of the equipment for 2014 through 2016 under each method, assuming 16000 units of production in 2016.

Begin with Method A:

	Method A
	Annual
	Depreciation		Accumulated
Year|	Expense		Depreciation		Book Value
Start|					_________
2014|	$3,000		$3,000		_________
2015|	3,000		6,000		_________
2016|	_____		_____		_________

Next, complete the table for Method B.

	Method B
	Annual
	Depreciation		Accumulated
Year|	Expense		Depreciation		Book Value
Start|					_______
2014|	$6,400		$6,400		_______
2015|	5,120		11,520		_______
2016|	______		______		_______

Now, complete the table for Method C.

	Method C
	Annual
	Depreciation		Accumulated
Year|	Expense		Depreciation		Book Value
Start|					_______
2014|	$400		$400		_______
2015|	2,600		3,000		_______
2016|	______		______		_______