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Compute the depreciation expense under declining-balance using double the straight-line rate for 2022 and 2023. 2022 2023 Depreciation expense $ %24

Compute the depreciation expense under declining-balance using double the straight-line rate for 2022 and 2023. 2022 2023 Depreciation expense $ %24

FINANCIAL ACCOUNTING
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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### Depreciation Calculation Exercise #### Question (c) **Status:** Your answer is incorrect. **Task:** Compute the depreciation expense under the declining-balance method using double the straight-line rate for the years 2022 and 2023. **Input Fields:** - **2022 Depreciation Expense:** ___ (in dollars) - **2023 Depreciation Expense:** ___ (in dollars) The image contains a response section with fields for entering the computed depreciation expenses for the respective years. The declining-balance method requires understanding the doubling of the straight-line rate to appropriately calculate annual depreciation.
Transcribed Image Text:### Depreciation Calculation Exercise #### Question (c) **Status:** Your answer is incorrect. **Task:** Compute the depreciation expense under the declining-balance method using double the straight-line rate for the years 2022 and 2023. **Input Fields:** - **2022 Depreciation Expense:** ___ (in dollars) - **2023 Depreciation Expense:** ___ (in dollars) The image contains a response section with fields for entering the computed depreciation expenses for the respective years. The declining-balance method requires understanding the doubling of the straight-line rate to appropriately calculate annual depreciation.
**Wildhorse Co. Machine Depreciation Analysis** **Background Information:** Wildhorse Co. purchased a new machine on October 1, 2022, costing $130,000. The machine is expected to have a salvage value of $18,000 after its service life of 10,000 working hours, estimated to last 5 years. **Depreciation Calculations:** **(a) Straight-Line Method for 2022:** - *Method Explanation:* The straight-line depreciation method allocates the cost of the machine evenly across its useful life. - *Calculation:* - Depreciation Expense = (Cost - Salvage Value) / Useful Life - = ($130,000 - $18,000) / 5 years = $22,400 per year - For 2022 (since the machine was purchased in October), calculate for 3 months: ($22,400 / 12) * 3 = $5,600 - *Depreciation Expense 2022:* $5,600 - *Status:* The calculated depreciation expense for 2022 using the straight-line method is correct. **(b) Units-of-Activity Method for 2022:** - *Method Explanation:* The units-of-activity depreciation method allocates the cost based on actual usage. - *Given:* 2022 machine usage = 1,620 hours - *Calculation:* - Depreciable Cost per Hour = (Cost - Salvage Value) / Total Expected Hours - = ($130,000 - $18,000) / 10,000 hours = $11.20 per hour - Depreciation Expense for 2022 = 1,620 hours * $11.20 per hour = $18,144 - *Depreciation Expense 2022:* $18,144 - *Status:* The calculated depreciation expense under the units-of-activity method for 2022 is correct, rounded to the nearest dollar as required. **Attempts Used:** 1 of 3 used for both calculations. This analysis shows different methods of calculating depreciation for accounting and financial reporting, providing insights on how asset utilization impacts financial statements.
Transcribed Image Text:**Wildhorse Co. Machine Depreciation Analysis** **Background Information:** Wildhorse Co. purchased a new machine on October 1, 2022, costing $130,000. The machine is expected to have a salvage value of $18,000 after its service life of 10,000 working hours, estimated to last 5 years. **Depreciation Calculations:** **(a) Straight-Line Method for 2022:** - *Method Explanation:* The straight-line depreciation method allocates the cost of the machine evenly across its useful life. - *Calculation:* - Depreciation Expense = (Cost - Salvage Value) / Useful Life - = ($130,000 - $18,000) / 5 years = $22,400 per year - For 2022 (since the machine was purchased in October), calculate for 3 months: ($22,400 / 12) * 3 = $5,600 - *Depreciation Expense 2022:* $5,600 - *Status:* The calculated depreciation expense for 2022 using the straight-line method is correct. **(b) Units-of-Activity Method for 2022:** - *Method Explanation:* The units-of-activity depreciation method allocates the cost based on actual usage. - *Given:* 2022 machine usage = 1,620 hours - *Calculation:* - Depreciable Cost per Hour = (Cost - Salvage Value) / Total Expected Hours - = ($130,000 - $18,000) / 10,000 hours = $11.20 per hour - Depreciation Expense for 2022 = 1,620 hours * $11.20 per hour = $18,144 - *Depreciation Expense 2022:* $18,144 - *Status:* The calculated depreciation expense under the units-of-activity method for 2022 is correct, rounded to the nearest dollar as required. **Attempts Used:** 1 of 3 used for both calculations. This analysis shows different methods of calculating depreciation for accounting and financial reporting, providing insights on how asset utilization impacts financial statements.
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