Obj. 2 Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating EXCEL TEMPLATE hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Instructions Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method.

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Chapter1: Financial Statements And Business Decisions
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PR 9-3A Depreciation By Three Methods; Partial Years
Obj. 2 Perdue Company purchased equipment on April 1 for $270,000. The
equipment was expected to have a useful life of three years or 18,000 operating
EXCEL TEMPLATE
hours, and a residual value of $9,000. The equipment was used for 7,500 hours
during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in
Year 4.
Instructions
Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2,
Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the
double-declining-balance method.
WOGOO
étv
MacBook Air
Transcribed Image Text:PR 9-3A Depreciation By Three Methods; Partial Years Obj. 2 Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating EXCEL TEMPLATE hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4. Instructions Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. WOGOO étv MacBook Air
C
J
K
M
16
a.
b.
C.
17
Straight-
Units-of-
Double-Declining-
18
Year
Line
Activity
Balance
19
65,250
87,000
87,000
21,750
2$
Rage 1
20
1
24
21
22
3.
23
4
24
Totals
261,000
25
26
Calculations:
27
Straight-line method:
For full year:
28
29
30
(Cost
$270,000
Residual Value)
Years
Yearly Depreciation
31
2$
9,000
3
24
87,000
32
33
For part years:
34
Year 1 Depreciation x Portion of Year
Depreciation
%3D
35
87,000
0.7500
24
65,250
36
37
Year 4 Depreciation x Portion of Year
Depreciation
%3D
38
87,000
39
40
Units-of-activity method:
41
(Cost
Residual Value)
Total Hours
Rate
42
43
44
Rate
Hours
Yearly Depreciation
%3D
45
Year 1
7,500
46
Year 2
5,500
47
Year 3
4,000
48
Year 4
1,000
49
Page
50
Double-declining-balance method:
51
Depreciable
Balance
Yearly
52
Portion of Year
Depreciation
%3D
53
Year 1
54
Year 2
55
Year 3
56
Since depreciation cannot cause book value to fall below residual value:
57
Depreciable
Balance
58
Residual Value
Yearly Depreciation
%3D
59
Year 4
Transcribed Image Text:C J K M 16 a. b. C. 17 Straight- Units-of- Double-Declining- 18 Year Line Activity Balance 19 65,250 87,000 87,000 21,750 2$ Rage 1 20 1 24 21 22 3. 23 4 24 Totals 261,000 25 26 Calculations: 27 Straight-line method: For full year: 28 29 30 (Cost $270,000 Residual Value) Years Yearly Depreciation 31 2$ 9,000 3 24 87,000 32 33 For part years: 34 Year 1 Depreciation x Portion of Year Depreciation %3D 35 87,000 0.7500 24 65,250 36 37 Year 4 Depreciation x Portion of Year Depreciation %3D 38 87,000 39 40 Units-of-activity method: 41 (Cost Residual Value) Total Hours Rate 42 43 44 Rate Hours Yearly Depreciation %3D 45 Year 1 7,500 46 Year 2 5,500 47 Year 3 4,000 48 Year 4 1,000 49 Page 50 Double-declining-balance method: 51 Depreciable Balance Yearly 52 Portion of Year Depreciation %3D 53 Year 1 54 Year 2 55 Year 3 56 Since depreciation cannot cause book value to fall below residual value: 57 Depreciable Balance 58 Residual Value Yearly Depreciation %3D 59 Year 4
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