Depreciation for Partial Periods: Hathaway Company purchased a copying machine for $8,700 on October 1, 2019. The machine's residual value was $500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ fill in the blank 2020 $ fill in the blank 2 Sum-of-the-years'-digits method 2019 $ fill in the blank 2020 $ fill in the blank Double-declining-balance method 2019 $ fill in the blank 5 2020 $ fill in the blank 6 Next Level Which method produces the highest book value at the end of 2020? Next Level Which method produces the highest charge to income in 2020? Next Level Which of the following statements regarding depreciation is/are correct? All methods result in higher depreciation expense in the early years of the life of the asset. All methods result in the same total amount of depreciation expense.
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.
Hathaway Company purchased a copying machine for $8,700 on October 1, 2019. The machine's residual value was $500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month.
Required:
Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ fill in the blank
2020 $ fill in the blank
2 Sum-of-the-years'-digits method
2019 $ fill in the blank
2020 $ fill in the blank
Double-declining-balance method
2019 $ fill in the blank 5
2020 $ fill in the blank 6
Next Level Which method produces the highest book value at the end of 2020?
Next Level Which method produces the highest charge to income in 2020?
Next Level Which of the following statements regarding depreciation is/are correct?
All methods result in higher depreciation expense in the early years of the life of the asset. All methods result in the same total amount of depreciation expense.
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