Question
Use the information on the Given Data worksheet to prepare three depreciation schedules using the following methods: straight-line, double-declining balance, and activity-based. Auburn Car Wash
| Use the information on the Given Data worksheet to prepare three depreciation schedules using the following methods: straight-line, double-declining balance, and activity-based. | |||||||||||||||
| Auburn Car Wash | |||||||||||||||
| Straight Line | |||||||||||||||
| Calculation | End of Year Amounts | ||||||||||||||
| Depreciable | X | Depreciation | = | Depreciation | Accumulated | Book | |||||||||
| Year | Cost | Rate | Expense | Depreciation | Value | ||||||||||
| 1 | Class hour: | If you hover your mouse over a cell with a red flag you will see the comment | |||||||||||||
| 2 | |||||||||||||||
| 3 | |||||||||||||||
| 4 | |||||||||||||||
| 5 | |||||||||||||||
| Total | |||||||||||||||
| Auburn Car Wash | |||||||||||||||
| Double-Declining-Balance | |||||||||||||||
| Calculation | End of Year Amounts | ||||||||||||||
| Beginning | X | Depreciation | = | Depreciation | Accumulated | Book | |||||||||
| Year | Book Value | Rate | Expense | Depreciation | Value | ||||||||||
| 1 | If you hover your mouse over a cell with a red flag you will see the comment | ||||||||||||||
| 2 | |||||||||||||||
| 3 | |||||||||||||||
| 4 | |||||||||||||||
| 5 | Note: for year 5 you must make the year end book value equal to the Residual Value | ||||||||||||||
| Total | Therefore you will need to take the beginning book value less the Residual Value | ||||||||||||||
| Auburn Car Wash | |||||||||||||||
| Activity-Based | When you have completed all three schedules answer the following question. | ||||||||||||||
| What do you observe about the Book Value at the end of the 5th year for all three methods? | |||||||||||||||
| Calculation | End of Year Amounts | ||||||||||||||
| Hours | X | Depreciation | = | Depreciation | Accumulated | Book | Type answer here-------> | ||||||||
| Year | Used | Rate | Expense | Depreciation | Value | ||||||||||
| 1 | |||||||||||||||
| 2 | |||||||||||||||
| 3 | |||||||||||||||
| 4 | |||||||||||||||
| 5 | |||||||||||||||
| Total | |||||||||||||||
Cost of new car wash machines $800,000 Estimated residual value $50,000 Machine life in years 5 Machine life in hours 10,000
Actual use per year: Hours Year Used 1 2,000 2 1,800 3 2,200 4 2,100 5 1,900
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A Journey Into Auditing Culture
Authors: Grant Thornton United Kingdom, Susan Jex, Eddie J. Best
1st Edition
1634540565, 978-1634540568
