### 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.

The term, residual value, is the estimated amount that an entity would currently obtain from…

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

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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