In recent years, Cullumber Corporation has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below. Machine Acquired Cost Residual Value Useful Life (in years) Depreciation Method 1 Jan. 1, 2025 $91,200 $11,200 5 Straight-line 2 July 1, 2026 87,500 10,350 5 Diminishing-balance 3 Nov. 1, 2026 66,585 5,510 6 Units-of-production For the diminishing-balance method, Cullumber Corporation uses double the straight-line rate. For the units-of-production method, total machine hours are expected to be 24,430. Actual hours of use in the first 3 years were: 2026, 390; 2027, 4,070; and 2028, 5,180. (a) Prepare separate depreciation schedules for each machine. Prepare the schedule for all years, information permitting. (Round depreciation per unit to 2 decimal places, eg. 5.20 and answers to the nearest whole dollar, eg. 5,275. Do not leave any answer field blank. Enter O for amounts.) Machine 1: Straight-line depreciation Year 2025 $ 2026 2027 2028 2029 Calculation Depreciable Depreciation Cost Rate Machine 2: Diminishing-balance depreciation Year Carrying Amount Beg. of Year 2026 $ 2027 2028 2029 2030 Machine 3: Units-of-production depreciation Calculation Depreciation Rate/Unit $ # of Months % % ✓ % ✓ % % ✓ Calculation Depreciation Rate % # of Months Depreciation Expense $ ✓ $ % ✓ % ✓ % Depreciation Expense End of Year Depreciation Expense Accumulated Depreciation Carrying Amount $ $

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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.