Computing Depreciation Using Various Depreciation Methods To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are us for equipment purchased on January 1 of the current year. Cost and residual value Estimated service life: Acquisition cost Residual value $10,000 $400 Years 5 Required Compute annual depreciation using each of the following methods. a. Straight-line depreciation: Compute the depreciation rate and amount for each year. Note: Enter the rate in decimal form (such as 0.10) and not as a percentage. Depreciation Rate Answer Year 1 Depreciation Expense Answer Service hours 8,000 Productive output (units) 19,200 Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Expense Answer Answer Answer Answer Answer b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amoun depreciation expense for the first year assuming 1,760 service hours of actual operation. Depreciation rate per service hour Answer Year 1 Depreciation Expense Answer c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amo of depreciation expense for the first year assuming 3,200 units of output. Depreciation rate per unit Answer d. Sum-of-the-years'-digits method: Compute the depreciation amount for each year.
Computing Depreciation Using Various Depreciation Methods To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are us for equipment purchased on January 1 of the current year. Cost and residual value Estimated service life: Acquisition cost Residual value $10,000 $400 Years 5 Required Compute annual depreciation using each of the following methods. a. Straight-line depreciation: Compute the depreciation rate and amount for each year. Note: Enter the rate in decimal form (such as 0.10) and not as a percentage. Depreciation Rate Answer Year 1 Depreciation Expense Answer Service hours 8,000 Productive output (units) 19,200 Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Expense Answer Answer Answer Answer Answer b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amoun depreciation expense for the first year assuming 1,760 service hours of actual operation. Depreciation rate per service hour Answer Year 1 Depreciation Expense Answer c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amo of depreciation expense for the first year assuming 3,200 units of output. Depreciation rate per unit Answer d. Sum-of-the-years'-digits method: Compute the depreciation amount for each year.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Computing Depreciation Using Various Depreciation Methods
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are used
for equipment purchased on January 1 of the current year.
Cost and residual value
Estimated service life:
Acquisition cost
Residual value
$10,000
$400
Years
Required
Compute annual depreciation using each of the following methods.
a. Straight-line depreciation: Compute the depreciation rate and amount for each year.
Note: Enter the rate in decimal form (such as 0.10) and not as a percentage.
Depreciation Rate Answer
Year 1
Depreciation Expense Answer
5
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation Expense Answer Answer Answer Answer Answer
Service hours
8,000
Productive output (units) 19,200
b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount of
depreciation expense for the first year assuming 1,760 service hours of actual operation.
Depreciation rate per service hour Answer
Year 1
Depreciation Expense Answer
c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount
of depreciation expense for the first year assuming 3,200 units of output.
Depreciation rate per unit Answer
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d. Sum-of-the-years'-digits method: Compute the depreciation amount for each year.
Year 1 Year 2 Year 3 Year 4 Year 5
Answer Answer Answer Answer Answer
e. Double-declining-balance method: Compute the depreciation amount for each year.
Year 1 Year 2 Year 3
Answer Answer Answer Answer
Year 4 Year 5
Answer
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