On January 1, 2021 the Volga Corporation purchased a new machine for $3240 cash. The machine has an estimated useful life of 3 years and a salvage value of $324. The following data are also available: Estimated Unit Output over Life of Equipment 30000 Unit Production in 2021 12000 Unit Production in 2022 6000 Unit Production in 2023 and following years 12000 Required: Prepare journal entries to record depreciation expense (rounding all amounts to the nearest $) for each December year end for the 3 year life of the machine using: 1. Straight Line Depreciation 2. Double Declining Balance Depreciation 3. Units of Production 4. Compute the net book value at the end of 2023 using straight line depreciation. 5. Compute the net book value at the end of 2023 using double declining balance depreciation. 6. Compute the net book value at the end of 2023 using units of production depreciation. Upon completion, enter the following data here: Deprec. Method 2021 Exp. 2022 Exp. Book Value End 2023 Straight Line: Double Dec. Bal.: Production Units:

On January 1, 2021 the Volga Corporation purchased a new machine for $3240 cash. The machine has an estimated useful life of 3 years and a salvage value of $324. The following data are also available: Estimated Unit Output over Life of Equipment 30000 Unit Production in 2021 12000 Unit Production in 2022 6000 Unit Production in 2023 and following years 12000 Required: Prepare journal entries to record depreciation expense (rounding all amounts to the nearest $) for each December year end for the 3 year life of the machine using: 1. Straight Line Depreciation 2. Double Declining Balance Depreciation 3. Units of Production 4. Compute the net book value at the end of 2023 using straight line depreciation. 5. Compute the net book value at the end of 2023 using double declining balance depreciation. 6. Compute the net book value at the end of 2023 using units of production depreciation. Upon completion, enter the following data here: Deprec. Method 2021 Exp. 2022 Exp. Book Value End 2023 Straight Line: Double Dec. Bal.: Production Units:

Name: Problem 8-5: The Volga CorporationOn January 1, 2021 the Volga Corpor
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Description: Problem 8-5: The Volga CorporationOn January 1, 2021 the Volga Corporation purchased a new machine for $3240 cash. The machine has an estimated useful life of 3 yearsand a salvage value of $324. The following data are also available:Estimated Unit O

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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Concept explainers

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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Question

Problem 8-5: The Volga Corporation
On January 1, 2021 the Volga Corporation purchased a new machine for $3240 cash. The machine has an estimated useful life of 3 years
and a salvage value of $324. The following data are also available:
Estimated Unit Output over Life of Equipment
30000
Unit Production in 2021
12000
Unit Production in 2022
6000
Unit Production in 2023 and following years
12000
Required: Prepare journal entries to record depreciation expense (rounding all amounts to the nearest $) for each December year end for
the 3 year life of the machine using:
1. Straight Line Depreciation
2. Double Declining Balance Depreciation
3. Units of Production
4. Compute the net book value at the end of 2023 using straight line depreciation.
5. Compute the net book value at the end of 2023 using double declining balance depreciation.
6. Compute the net book value at the end of 2023 using units of production depreciation.
Upon completion, enter the following data here:
Deprec. Method 2021 Exp.
2022 Exp.
Book Value End 2023
Straight Line:
Double Dec. Bal.:
Production Units:

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