Question
Winsey Company purchased equipment on January 2, 2019, for $700,000. The equipment has the following characteristics: Estimated service life 20 years, 100,000 hours, 950,000 units
Winsey Company purchased equipment on January 2, 2019, for $700,000. The equipment has the following characteristics:
| Estimated service life | 20 years, 100,000 hours, 950,000 units of output |
| Estimated residual value | $50,000 |
During 2019 and 2020, the company used the machine for 4,500 and 5,500 hours, respectively, and produced 40,000 and 60,000 units, respectively.
Required:
Compute depreciation expense for 2019 under each of the following methods:
Round the depreciation rate per hour to 3 decimal places and depreciation rate per unit to 2 decimal places. If required, round your final answers to the nearest dollar.
| 1. Straight-line method | $ fill in the blank 1 |
| 2. Activity method based on hours worked | $ fill in the blank 2 |
| 3. Activity method based on units of output | $ fill in the blank 3 |
| 4. Sum-of-the-years'-digits method | $ fill in the blank 4 |
| 5. Double-declining-balance method | $ fill in the blank 5 |
| 6. 150%-declining-balance method | $ fill in the blank 6 |
Compute depreciation expense for 2020 under each of the following methods:
Round the depreciation rate per hour to 3 decimal places and depreciation rate per unit to 2 decimal places. If required, round your final answers to the nearest dollar.
| 1. Straight-line method | $ fill in the blank 7 |
| 2. Activity method based on hours worked | $ fill in the blank 8 |
| 3. Activity method based on units of output | $ fill in the blank 9 |
| 4. Sum-of-the-years'-digits method | $ fill in the blank 10 |
| 5. Double-declining-balance method | $ fill in the blank 11 |
| 6. 150%-declining-balance method | $ fill in the blank 12 |
7. Next Level If Winsey used a service life of 16 years, 80,000 hours, or 750,000 units of output, what would be the effect on depreciation expense under the straight-line, sum-of-the-years'-digits, and declining-balance depreciation methods?
If required, round your answers to the nearest dollar.
| 2019 | 2020 | |
| Straight-line method | $ fill in the blank 13 | $ fill in the blank 14 |
| Activity method based on hours worked | $ fill in the blank 15 | $ fill in the blank 16 |
| Activity method based on units of output | $ fill in the blank 17 | $ fill in the blank 18 |
| Sum-of-the-years'-digits method | $ fill in the blank 19 | $ fill in the blank 20 |
| Double-declining-balance method | $ fill in the blank 21 | $ fill in the blank 22 |
| 150%-declining-balance method | $ fill in the blank 23 | $ fill in the blank 24 |
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Auditing Assurance Services And Ethics In Australia
Authors: Alvin Arens
10th Edition
1488609136, 978-1488609138
