1) University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000 including installation. The company estimates that the equipment will have a residual value of $30,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:YearHours Used12,60022,10032,20041,80051,60061,700Picture 1) Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.) 2)University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000 including installation. The company estimates that the equipment will have a residual value of $30,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: YearHours Used12,60022,10032,20041,80051,60061,700Picture 2) Prepare a depreciation schedule for six years using the activity-based method. **Task:** Prepare a depreciation schedule for six years using the double-declining-balance method. (Note: Do not round your intermediate calculations.)---**UNIVERSITY CAR WASH****Depreciation Schedule—Double-Declining-Balance**_End of year amounts_| Year | Depreciation Expense | Accumulated Depreciation | Book Value ||------|----------------------|--------------------------|------------|| 1 | | | || 2 | | | || 3 | | | || 4 | | | || 5 | | | || 6 | | | || Total | | | |---**Explanation:**The table is designed to record the depreciation of an asset over six years using the double-declining-balance method. For each year, the following data will be recorded:- **Depreciation Expense:** This column will show the depreciation expense for each year, calculated using the double-declining-balance method.- **Accumulated Depreciation:** This column will show the total depreciation accumulated up to the end of each year.- **Book Value:** This column will show the asset's book value, calculated by subtracting the accumulated depreciation from the initial cost.The goal of this table is to help understand and plan the financial implications of depreciation on the asset's value over time. **Exercise: Creating a Depreciation Schedule**Prepare a depreciation schedule for six years using the activity-based method. *(Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)***UNIVERSITY CAR WASH****Depreciation Schedule—Activity-Based***End of Year Amounts*| Year | Depreciation Expense | Accumulated Depreciation | Book Value ||------|----------------------|--------------------------|------------|| 1 | | | || 2 | | | || 3 | | | || 4 | | | || 5 | | | || 6 | | | || **Total** | | | |In this exercise, you will calculate and populate the depreciation expense, accumulated depreciation, and book value for each year, adhering to the activity-based method. Round the depreciation rate to two decimal places for precision throughout your calculations.

Fixed assets: These are the assets which were used in the business for more than one year. These…

Answered: 1) University Car Wash built a deluxe…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1) University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000 including installation. The company estimates that the equipment will have a residual value of $30,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:

Year	Hours Used
1	2,600
2	2,100
3	2,200
4	1,800
5	1,600
6	1,700

Picture 1) Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.)

2)University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000 including installation. The company estimates that the equipment will have a residual value of $30,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:

Year	Hours Used
1	2,600
2	2,100
3	2,200
4	1,800
5	1,600
6	1,700

Picture 2) Prepare a depreciation schedule for six years using the activity-based method.

**Task:** Prepare a depreciation schedule for six years using the double-declining-balance method. (Note: Do not round your intermediate calculations.)

---

**UNIVERSITY CAR WASH**

**Depreciation Schedule—Double-Declining-Balance**

_End of year amounts_

| Year | Depreciation Expense | Accumulated Depreciation | Book Value |
|------|----------------------|--------------------------|------------|
| 1 | | | |
| 2 | | | |
| 3 | | | |
| 4 | | | |
| 5 | | | |
| 6 | | | |

| Total | | | |

---

**Explanation:**

The table is designed to record the depreciation of an asset over six years using the double-declining-balance method. For each year, the following data will be recorded:

- **Depreciation Expense:** This column will show the depreciation expense for each year, calculated using the double-declining-balance method.
- **Accumulated Depreciation:** This column will show the total depreciation accumulated up to the end of each year.
- **Book Value:** This column will show the asset's book value, calculated by subtracting the accumulated depreciation from the initial cost.

The goal of this table is to help understand and plan the financial implications of depreciation on the asset's value over time.

**Exercise: Creating a Depreciation Schedule**

Prepare a depreciation schedule for six years using the activity-based method. *(Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)*

**UNIVERSITY CAR WASH**

**Depreciation Schedule—Activity-Based**

*End of Year Amounts*

| Year | Depreciation Expense | Accumulated Depreciation | Book Value |
|------|----------------------|--------------------------|------------|
| 1 | | | |
| 2 | | | |
| 3 | | | |
| 4 | | | |
| 5 | | | |
| 6 | | | |
| **Total** | | | |

In this exercise, you will calculate and populate the depreciation expense, accumulated depreciation, and book value for each year, adhering to the activity-based method. Round the depreciation rate to two decimal places for precision throughout your calculations.

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