Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of five years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods. a. Straight-line: First year Second year b. Units-of-activity (1,200 hours first year; 2,250 hours second year): First year Second year c. Double-declining-balance: First year Second year

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### Depreciation Calculation for Equipment

**Scenario:**
Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of five years, or 14,000 operating hours, and a residual value of $10,000.

**Objective:**
Compute the depreciation for the first and second years of use by each of the following methods:

#### a. Straight-line Method:

- **First year**: $\_\_\_\_\_\_\_\_\_\_
- **Second year**: $\_\_\_\_\_\_\_\_\_\_

#### b. Units-of-activity Method (1,200 hours first year; 2,250 hours second year):

- **First year**: $\_\_\_\_\_\_\_\_\_\_
- **Second year**: $\_\_\_\_\_\_\_\_\_\_

#### c. Double-declining-balance Method:

- **First year**: $\_\_\_\_\_\_\_\_\_\_
- **Second year**: $\_\_\_\_\_\_\_\_\_\_

**Instructions:**
1. **Straight-line Method:**
   - Calculate annual depreciation expense by dividing the depreciable amount (cost - residual value) by the useful life of the equipment.

2. **Units-of-activity Method:**
   - Calculate the depreciation expense per hour by dividing the depreciable amount by the total expected operating hours.
   - Multiply this rate by the actual hours used to find the annual depreciation expense for each year.

3. **Double-declining-balance Method:**
   - Calculate the depreciation rate by doubling the straight-line depreciation rate (2 / useful life).
   - Multiply this rate by the book value of the equipment at the beginning of each year.

**Notes:**
- This worksheet facilitates calculations for financial accounting and tax purposes.
- Be sure to fill in the required calculations in the provided blank spaces for each method specified.
Transcribed Image Text:### Depreciation Calculation for Equipment **Scenario:** Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of five years, or 14,000 operating hours, and a residual value of $10,000. **Objective:** Compute the depreciation for the first and second years of use by each of the following methods: #### a. Straight-line Method: - **First year**: $\_\_\_\_\_\_\_\_\_\_ - **Second year**: $\_\_\_\_\_\_\_\_\_\_ #### b. Units-of-activity Method (1,200 hours first year; 2,250 hours second year): - **First year**: $\_\_\_\_\_\_\_\_\_\_ - **Second year**: $\_\_\_\_\_\_\_\_\_\_ #### c. Double-declining-balance Method: - **First year**: $\_\_\_\_\_\_\_\_\_\_ - **Second year**: $\_\_\_\_\_\_\_\_\_\_ **Instructions:** 1. **Straight-line Method:** - Calculate annual depreciation expense by dividing the depreciable amount (cost - residual value) by the useful life of the equipment. 2. **Units-of-activity Method:** - Calculate the depreciation expense per hour by dividing the depreciable amount by the total expected operating hours. - Multiply this rate by the actual hours used to find the annual depreciation expense for each year. 3. **Double-declining-balance Method:** - Calculate the depreciation rate by doubling the straight-line depreciation rate (2 / useful life). - Multiply this rate by the book value of the equipment at the beginning of each year. **Notes:** - This worksheet facilitates calculations for financial accounting and tax purposes. - Be sure to fill in the required calculations in the provided blank spaces for each method specified.
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