Calculate the amount of depreciation expense that Kingbird should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal places, e.g. 2,125.) (1) Kingbird uses the straight-line method of depreciation. (2) Kingbird uses the declining-balance method. The rate used is twice the straight-line rate. (3) Kingbird uses the units-of-activity method and estimates that the useful life of the machine is 162,000 units. Actual usage is as follows: 2022, 60,500 units; 2023, 45,500 units; 2024, 30,500 units; and 2025, 25,500 units.
Calculate the amount of depreciation expense that Kingbird should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal places, e.g. 2,125.) (1) Kingbird uses the straight-line method of depreciation. (2) Kingbird uses the declining-balance method. The rate used is twice the straight-line rate. (3) Kingbird uses the units-of-activity method and estimates that the useful life of the machine is 162,000 units. Actual usage is as follows: 2022, 60,500 units; 2023, 45,500 units; 2024, 30,500 units; and 2025, 25,500 units.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Calculate the amount of depreciation expense that Kingbird should record for Machine B each year of its useful life under the
following assumptions. (Round depreciation cost per unit to 2 decimal places, e.g. 12.25. Round final answers to O decimal
places, e.g. 2,125.)
(1) Kingbird uses the straight-line method of depreciation.
(2)
Kingbird uses the declining-balance method. The rate used is twice the straight-line rate.
(3)
Kingbird uses the units-of-activity method and estimates that the useful life of the machine is 162,000 units. Actual
usage is as follows: 2022, 60,500 units; 2023, 45,500 units; 2024, 30,500 units; and 2025, 25,500 units.
$
$
2022
tA
$
2023
Depreciation Expense
LA
$
2024
$
$
2025
Transcribed Image Text:On January 1, 2022, Kingbird Company purchased the following two machines for use in its production process.
Machine A:
Machine B:
The cash price of this machine was $40,000. Related expenditures also paid in cash included: sales tax $2,250,
shipping costs $100, insurance during shipping $70, installation and testing costs $100, and $100 of oil and
lubricants to be used with the machinery during its first year of operations. Kingbird estimates that the useful life of
the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that the
straight-line method of depreciation is used.
The recorded cost of this machine was $180,000. Kingbird estimates that the useful life of the machine is 4 years
with a $11,520 salvage value remaining at the end of that time period.
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