$1,010,000. SCI expects that the residual value of the equipment at the end of its 5-year life will be $200,000 and expects that equipment will operate for a total of 90,000 equipment working hours. Actual equipment working hours used for the years ended December 31, 2019 and December 31, 2020 are 15,000 and 24,000, respectively. Required: a) Compute the depreciation expense for the years ended December 31, 2019 and December 31, 2020 under the Straight line, Declining Balance at 30% rate, and the Units of Production methods and insert your answers into the table below. Round to the nearest whole number. Depreciation Method Depreciation Expense for 2019 Depreciation Expense for 2020 Straight Line Method Declining Balance (30% rate) Units-ofProduction Method
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.
$1,010,000. SCI expects that the residual value of the equipment at the end of its 5-year life will
be $200,000 and expects that equipment will operate for a total of 90,000 equipment working
hours. Actual equipment working hours used for the years ended December 31, 2019 and
December 31, 2020 are 15,000 and 24,000, respectively.
Required:
a) Compute the
2020 under the Straight line, Declining Balance at 30% rate, and the
methods
Depreciation
Method
Depreciation Expense for 2019 Depreciation Expense for 2020
Method
Declining Balance
(30% rate)
Units-ofProduction
Method
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