Question
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are used for equipment purchased on January 1, 2020.
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are used for equipment purchased on January 1, 2020.
Cost and residual value | Estimated service life: | |||
Acquisition cost |
| Years | 5 | |
Residual value | $500 | Service hours | 10,000 | |
Productive output (units) | 24,000 |
Required
Compute annual depreciation using each of the following methods.
a. Straight-line depreciation: Compute the depreciation rate and amount for each year.
Depreciation Rate |
2020 | 2021 | 2022 | 2023 | 2024 | |
---|---|---|---|---|---|
Depreciation Expense |
b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount of depreciation expense for the first year assuming 2,200 service hours of actual operation.
Depreciation Rate |
2020 | |
---|---|
Depreciation Expense |
c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount of depreciation expense for the first year assuming 4,000 units of output.
Depreciation Rate |
2020 | |
---|---|
Depreciation Expense |
d. Sum-of-the-years-digits method: Compute the depreciation amount for each year.
2020 | 2021 | 2022 | 2023 | 2024 |
---|---|---|---|---|
e. Double-declining-balance method: Compute the depreciation amount for each year.
2020 | 2021 | 2022 | 2023 | 2024 |
---|---|---|---|---|
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