On October 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service. Straight-Line Choose Numerator: / Choose Denominator: = Annual Depreciation Formula / = Annual Depreciation Amounts / = Year Annual Depreciation x Fraction of Year Depreciation expense 2021 x = 2022 x = Double-Declining Balance Choose Numerator: × Choose Denominator: × Fraction of Year = Depreciation Expense Formula × × Fraction of Year = Depreciation Expense Amount for 2021 × % × = Amount for 2022 × % × = Units of production (units produced in 2021, 10,000; units produced in 2022, 25,000). Select formula for Units of Production Depreciation: Calculate 2021 depreciation expense: Depreciation per unit rate Units produced in 2021 Depreciation in 2021 Calculate 2022 depreciation expense: Depreciation per unit rate Units produced in 2022 Depreciation in 2022

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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On October 1, 2021, the Allegheny Corporation purchased equipment for $115,000. The estimated service life of the equipment is 10 years and the estimated residual value is $5,000. The equipment is expected to produce 220,000 units during its life.

Required:
Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreciation is calculated based on the number of months the asset is in service.

Straight-Line

	Choose Numerator:	/	Choose Denominator:	=	Annual Depreciation
Formula		/		=	Annual Depreciation
Amounts		/		=
Year	Annual Depreciation	x	Fraction of Year		Depreciation expense
2021		x		=
2022		x		=

Double-Declining Balance

	Choose Numerator:	×	Choose Denominator:		×	Fraction of Year	=	Depreciation Expense
Formula		×			×	Fraction of Year	=	Depreciation Expense
Amount for 2021		×		%	×		=
Amount for 2022		×		%	×		=

Units of production (units produced in 2021, 10,000; units produced in 2022, 25,000).

Select formula for Units of Production Depreciation:

Calculate 2021 depreciation expense:
Depreciation per unit rate
Units produced in 2021
Depreciation in 2021
Calculate 2022 depreciation expense:
Depreciation per unit rate
Units produced in 2022
Depreciation in 2022

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