Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciationmethods: straight-line,units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. Begin by preparing a depreciation schedule using thestraight-line method. Straight-Line Depreciation Schedule Depreciation for the Year Asset Depreciable Useful Depreciation Accumulated Book Date Cost Cost Life Expense Depreciation Value 1-2-2024 $30,000 $30,000 12-31-2024 $24,000 ÷ 4 years = $6,000 $6,000 24,000 12-31-2025 24,000 ÷ 4 years = 6,000 12,000 18,000 12-31-2026 24,000 ÷ 4 years = 6,000 18,000 12,000 12-31-2027 24,000 ÷ 4 years = 6,000 24,000 6,000 Before calculating the units-of-production depreciationschedule, calculate the depreciation expense per unit. Select theformula, then enter the amounts and calculate the depreciation expense per unit. ( Cost - Residual value ) ÷ Useful life in units = Depreciation per unit ( $30,000 - $6,000 ) ÷ 4,800 = $5 Prepare a depreciation schedule using the units-of-production method. Units-of-Production Depreciation Schedule Depreciation for the Year Asset Depreciation Number of Depreciation Accumulated Book Date Cost Per Unit Units Expense Depreciation Value 1-2-2024 $30,000 $30,000 12-31-2024 480 × 5 = $2,400 $2,400 27,600 12-31-2025 1440 × 5 = 7,200 9,600 20,400 12-31-2026 1920 × 5 = 9,600 19,200 10,800 12-31-2027 960 × 5 = 4,800 24,000 6,000 Enter any number in the edit fields and then click Check Answer. 2 parts remaining Clear All Check Answer useful life, Southern estimates that its residual value will be $6,000. The equipment operated for 480 hours the first year, 1,440 hours the second year, 1,920 hours the third year, and 960 hours the fourth year. Read the requirements
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.
Prepare a schedule of
Begin by preparing a depreciation schedule using thestraight-line method.
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Straight-Line Depreciation Schedule |
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|
Depreciation for the Year |
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|
Asset |
Depreciable |
Useful |
Depreciation |
Accumulated |
Book |
|||
|
Date |
Cost |
Cost |
Life |
Expense |
Depreciation |
Value |
||
|
1-2-2024 |
$30,000 |
$30,000 |
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|
12-31-2024 |
$24,000 |
÷ |
4 years |
= |
$6,000 |
$6,000 |
24,000 |
|
|
12-31-2025 |
24,000 |
÷ |
4 years |
= |
6,000 |
12,000 |
18,000 |
|
|
12-31-2026 |
24,000 |
÷ |
4 years |
= |
6,000 |
18,000 |
12,000 |
|
|
12-31-2027 |
24,000 |
÷ |
4 years |
= |
6,000 |
24,000 |
6,000 |
Before calculating the units-of-production depreciationschedule, calculate the depreciation expense per unit. Select theformula, then enter the amounts and calculate the depreciation expense per unit.
|
( |
Cost |
- |
Residual value |
) ÷ |
Useful life in units |
= |
Depreciation per unit |
|
( |
$30,000 |
- |
$6,000 |
) ÷ |
4,800 |
= |
$5 |
Prepare a depreciation schedule using the units-of-production method.
|
Units-of-Production Depreciation Schedule |
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|
Depreciation for the Year |
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|
Asset |
Depreciation |
Number of |
Depreciation |
Accumulated |
Book |
|||
|
Date |
Cost |
Per Unit |
Units |
Expense |
Depreciation |
Value |
||
|
1-2-2024 |
$30,000 |
$30,000 |
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|
12-31-2024 |
480 |
× |
5 |
= |
$2,400 |
$2,400 |
27,600 |
|
|
12-31-2025 |
1440 |
× |
5 |
= |
7,200 |
9,600 |
20,400 |
|
|
12-31-2026 |
1920 |
× |
5 |
= |
9,600 |
19,200 |
10,800 |
|
|
12-31-2027 |
960 |
× |
5 |
= |
4,800 |
24,000 |
6,000 |
Enter any number in the edit fields and then click Check Answer.
|
Clear All |
Check Answer |
useful life,
Southern
estimates that its residual value will be
$6,000.
The equipment operated for
480
hours the first year,
1,440
hours the second year,
1,920
hours the third year, and
960
hours the fourth year. Read the requirements
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