Berkshire Corporation purchased a copying machine for $9,800 on January 1, 2019. The machine's residual value was $1,175 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies in the first year and 446,000 in the second year. Required: 1. Compute depreciation expense for 2019 and 2020 using the: a. Straight-line method. Depreciation expense: $fill in the blank 1 per year b. Double-declining-balance method. Depreciation Expense 2019 $fill in the blank 2 2020 $fill in the blank 3 c. Units-of-production method. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Depreciation Expense 2019 $fill in the blank 4 2020 $fill in the blank 5 2. For each depreciation method, what is the book value of the machine at the end of 2019? At the end of 2020? If required, round your answers to the nearest whole dollar. 2019 2020 a. Straight-line method $fill in the blank 6 $fill in the blank 7 b. Double-declining-balance method $fill in the blank 8 $fill in the blank 9 c. Units-of-production method $fill in the blank 10 $fill in the blank 11
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Berkshire Corporation purchased a copying machine for $9,800 on January 1, 2019. The machine's residual value was $1,175 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies in the first year and 446,000 in the second year.
Required:
1. Compute depreciation expense for 2019 and 2020 using the:
a. Straight-line method.
Depreciation expense: $fill in the blank 1 per year
b. Double-declining-balance method.
| Depreciation Expense | |
| 2019 | $fill in the blank 2 |
| 2020 | $fill in the blank 3 |
c. Units-of-production method. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)
| Depreciation Expense | |
| 2019 | $fill in the blank 4 |
| 2020 | $fill in the blank 5 |
2. For each depreciation method, what is the book value of the machine at the end of 2019? At the end of 2020? If required, round your answers to the nearest whole dollar.
| 2019 | 2020 | ||
| a. | Straight-line method | $fill in the blank 6 | $fill in the blank 7 |
| b. | Double-declining-balance method | $fill in the blank 8 | $fill in the blank 9 |
| c. | Units-of-production method | $fill in the blank 10 | $fill in the blank 11 |
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