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 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. Required: 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. FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar. a. Straight-line method Year Year 1 Year 2 Year 3 Year 4 Year Year 1 b. Units-of-activity method Year 2 Year 3 Year 4 $ $ Year Amount $ Amount c. Double-declining-balance Method Amount
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 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. Required: 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. FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar. a. Straight-line method Year Year 1 Year 2 Year 3 Year 4 Year Year 1 b. Units-of-activity method Year 2 Year 3 Year 4 $ $ Year Amount $ Amount c. Double-declining-balance Method Amount
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text: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 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.
Required:
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. FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar.
a. Straight-line method
Year
Year 1
Year 2
Year 3
Year 4
b. Units-of-activity method
Year
Year 1
Year 2
Year 3
Year 4
Amount
Year
$
Amount
c. Double-declining-balance Method
Amount
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