In recent years, Wildhorse 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, 2018 $103,900 $13,200 5 Straight-line 2 July 1, 2019 83,750 10,010 5 Diminishing-balance 3 Nov. 1, 2019 70,587 6,570 6 Units-of-production For the diminishing-balance method, Wildhorse Corporation uses double the straight-line rate. For the units-of-production method, total machine hours are expected to be 23,710. Actual hours of use in the first 3 years were: 2019, 370; 2020, 4,130; and 2021, 4,700. (a) Prepare separate depreciation schedules for each machine. Prepare the schedule for all years, information permitting. (Round depreciation per unit to 2 decimal places, e.g. 5.20 and answers to the nearest whole dollar, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.) Machine 1: Straight-line depreciation Calculation End of Year Year Depreciable Amount Depreciation Rate # of months Depreciation Expense Accumulated Depreciation Carrying Amount 2018 $ % $ $ $ 2019 % 2020 % 2021 % 2022 % Machine 2: Diminishing-balance depreciation Calculation End of Year Year Carrying Amount Beg. of Year Depreciation Rate # of months Depreciation Expense Accumulated Depreciation Carrying Amount 2019 $ % $ $ $ 2020 % 2021 % 2022 % 2023 % Machine 3: Units-of-production depreciation Calculation End of Year Year Units-of- Production Depreciation Cost/Unit Depreciation Expense Accumulated Depreciation Carrying Amount 2019 $ $ $ $ 2020 2021
In recent years, Wildhorse 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, 2018 $103,900 $13,200 5 Straight-line 2 July 1, 2019 83,750 10,010 5 Diminishing-balance 3 Nov. 1, 2019 70,587 6,570 6 Units-of-production For the diminishing-balance method, Wildhorse Corporation uses double the straight-line rate. For the units-of-production method, total machine hours are expected to be 23,710. Actual hours of use in the first 3 years were: 2019, 370; 2020, 4,130; and 2021, 4,700. (a) Prepare separate depreciation schedules for each machine. Prepare the schedule for all years, information permitting. (Round depreciation per unit to 2 decimal places, e.g. 5.20 and answers to the nearest whole dollar, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.) Machine 1: Straight-line depreciation Calculation End of Year Year Depreciable Amount Depreciation Rate # of months Depreciation Expense Accumulated Depreciation Carrying Amount 2018 $ % $ $ $ 2019 % 2020 % 2021 % 2022 % Machine 2: Diminishing-balance depreciation Calculation End of Year Year Carrying Amount Beg. of Year Depreciation Rate # of months Depreciation Expense Accumulated Depreciation Carrying Amount 2019 $ % $ $ $ 2020 % 2021 % 2022 % 2023 % Machine 3: Units-of-production depreciation Calculation End of Year Year Units-of- Production Depreciation Cost/Unit Depreciation Expense Accumulated Depreciation Carrying Amount 2019 $ $ $ $ 2020 2021
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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.
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In recent years, Wildhorse 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.
For the diminishing-balance method, Wildhorse Corporation uses double the straight-line rate. For the units-of-production method, total machine hours are expected to be 23,710. Actual hours of use in the first 3 years were: 2019, 370; 2020, 4,130; and 2021, 4,700.
| Machine | Acquired | Cost | Residual Value |
Useful Life (in years) |
Depreciation Method | |||||
| 1 | Jan. 1, 2018 | $103,900 | $13,200 | 5 | Straight-line | |||||
| 2 | July 1, 2019 | 83,750 | 10,010 | 5 | Diminishing-balance | |||||
| 3 | Nov. 1, 2019 | 70,587 | 6,570 | 6 | Units-of-production |
For the diminishing-balance method, Wildhorse Corporation uses double the straight-line rate. For the units-of-production method, total machine hours are expected to be 23,710. Actual hours of use in the first 3 years were: 2019, 370; 2020, 4,130; and 2021, 4,700.
(a)
Prepare separate depreciation schedules for each machine. Prepare the schedule for all years, information permitting. (Round depreciation per unit to 2 decimal places, e.g. 5.20 and answers to the nearest whole dollar, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.)
Machine 1: Straight-line depreciation
Machine 2: Diminishing-balance depreciation
Machine 3: Units-of-production depreciation
Machine 1: Straight-line depreciation
| Calculation | End of Year | |||||
| Year | Depreciable Amount |
Depreciation Rate |
# of months |
Depreciation Expense |
Accumulated Depreciation |
Carrying Amount |
| 2018 | $ | % | $ | $ | $ | |
| 2019 | % | |||||
| 2020 | % | |||||
| 2021 | % | |||||
| 2022 | % |
Machine 2: Diminishing-balance depreciation
| Calculation | End of Year | |||||
| Year | Carrying Amount Beg. of Year |
Depreciation Rate |
# of months |
Depreciation Expense |
Accumulated Depreciation |
Carrying Amount |
| 2019 | $ | % | $ | $ | $ | |
| 2020 | % | |||||
| 2021 | % | |||||
| 2022 | % | |||||
| 2023 | % |
Machine 3: Units-of-production depreciation
| Calculation | End of Year | ||||
| Year | Units-of- Production |
Depreciation Cost/Unit |
Depreciation Expense |
Accumulated Depreciation |
Carrying Amount |
| 2019 | $ | $ | $ | $ | |
| 2020 | |||||
| 2021 |
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