Compute the depreciation for 2016 and 2017 under each of the following methods: Straight-line method 2016 $ fill in the blank 1 2017 $ fill in the blank 2 Sum-of-the-years'-digits method 2016 $ fill in the blank 3 2017 $ fill in the blank 4 Double-declining-balance method 2016 $ fill in the blank 5 2017 $ fill in the blank 6 Activity method based on hours worked 2016 $ fill in the blank 7 2017 $ fill in the blank 8 Activity method based on units of output 2016 $ fill in the blank 9 2017 $ fill in the blank 10 For each method, what is the book value of the machine at the end of 2016? At the end of 2017? Straight-line method 2016 $ fill in the blank 11 2017 $ fill in the blank 12 Sum-of-the-years'-digits method 2016 $ fill in the blank 13 2017 $ fill in the blank 14 Double-declining-balance method 2016 $ fill in the blank 15 2017 $ fill in the blank 16 Activity method based on hours worked 2016 $ fill in the blank 17 2017 $ fill in the blank 18 Activity method based on units of output 2016 $ fill in the blank 19 2017 $ fill in the blank 20 If Gruman used a service life of 8 years or 15,000 hours and a residual value of $10,000, what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance depreciation methods? Depreciation expense Straight-line method 2016 $ fill in the blank 21 2017 $ fill in the blank 22 Sum-of-the-years'-digits method 2016 $ fill in the blank 23 2017 $ fill in the blank 24 Double-declining-balance method 2016 $ fill in the blank 25 2017 $ fill in the blank 26 Book value Straight-line method 2016 $ fill in the blank 27 2017 $ fill in the blank 28 Sum-of-the-years'-digits method 2016 $ fill in the blank 29 2017 $ fill in the blank 30 Double-declining-balance method 2016 $ fill in the blank 31 2017 $ fill in the blank 32
Compute the depreciation for 2016 and 2017 under each of the following methods: Straight-line method 2016 $ fill in the blank 1 2017 $ fill in the blank 2 Sum-of-the-years'-digits method 2016 $ fill in the blank 3 2017 $ fill in the blank 4 Double-declining-balance method 2016 $ fill in the blank 5 2017 $ fill in the blank 6 Activity method based on hours worked 2016 $ fill in the blank 7 2017 $ fill in the blank 8 Activity method based on units of output 2016 $ fill in the blank 9 2017 $ fill in the blank 10 For each method, what is the book value of the machine at the end of 2016? At the end of 2017? Straight-line method 2016 $ fill in the blank 11 2017 $ fill in the blank 12 Sum-of-the-years'-digits method 2016 $ fill in the blank 13 2017 $ fill in the blank 14 Double-declining-balance method 2016 $ fill in the blank 15 2017 $ fill in the blank 16 Activity method based on hours worked 2016 $ fill in the blank 17 2017 $ fill in the blank 18 Activity method based on units of output 2016 $ fill in the blank 19 2017 $ fill in the blank 20 If Gruman used a service life of 8 years or 15,000 hours and a residual value of $10,000, what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance depreciation methods? Depreciation expense Straight-line method 2016 $ fill in the blank 21 2017 $ fill in the blank 22 Sum-of-the-years'-digits method 2016 $ fill in the blank 23 2017 $ fill in the blank 24 Double-declining-balance method 2016 $ fill in the blank 25 2017 $ fill in the blank 26 Book value Straight-line method 2016 $ fill in the blank 27 2017 $ fill in the blank 28 Sum-of-the-years'-digits method 2016 $ fill in the blank 29 2017 $ fill in the blank 30 Double-declining-balance method 2016 $ fill in the blank 31 2017 $ fill in the blank 32
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Depreciation Methods
Gruman Company purchased a machine for $220,000 on January 2, 2016. It made the following estimates:
| Service life | 5 years or 10,000 hours |
| Production | 200,000 units |
| Residual value | $20,000 |
In 2016, Gruman uses the machine for 1,800 hours and produces 44,000 units. In 2017, Gruman uses the machine for 1,500 hours and produces 35,000 units. If required, round your final answers to the nearest dollar.
Required:
- Compute the depreciation for 2016 and 2017 under each of the following methods:
- Straight-line method
2016 $ fill in the blank 1 2017 $ fill in the blank 2 - Sum-of-the-years'-digits method
2016 $ fill in the blank 3 2017 $ fill in the blank 4 - Double-declining-balance method
2016 $ fill in the blank 5 2017 $ fill in the blank 6 - Activity method based on hours worked
2016 $ fill in the blank 7 2017 $ fill in the blank 8 - Activity method based on units of output
2016 $ fill in the blank 9 2017 $ fill in the blank 10
- For each method, what is the book value of the machine at the end of 2016? At the end of 2017?
- Straight-line method
2016 $ fill in the blank 11 2017 $ fill in the blank 12 - Sum-of-the-years'-digits method
2016 $ fill in the blank 13 2017 $ fill in the blank 14 - Double-declining-balance method
2016 $ fill in the blank 15 2017 $ fill in the blank 16 - Activity method based on hours worked
2016 $ fill in the blank 17 2017 $ fill in the blank 18 - Activity method based on units of output
2016 $ fill in the blank 19 2017 $ fill in the blank 20
- If Gruman used a service life of 8 years or 15,000 hours and a residual value of $10,000, what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance depreciation methods?
Depreciation expense
- Straight-line method
2016 $ fill in the blank 21 2017 $ fill in the blank 22 - Sum-of-the-years'-digits method
2016 $ fill in the blank 23 2017 $ fill in the blank 24 - Double-declining-balance method
2016 $ fill in the blank 25 2017 $ fill in the blank 26
Book value
- Straight-line method
2016 $ fill in the blank 27 2017 $ fill in the blank 28 - Sum-of-the-years'-digits method
2016 $ fill in the blank 29 2017 $ fill in the blank 30 - Double-declining-balance method
2016 $ fill in the blank 31 2017 $ fill in the blank 32
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