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Prepare separat chedules for the life of the equipment s

Prepare separat chedules for the life of the equipment s

FINANCIAL ACCOUNTING
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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Crane Company purchased equipment on March 31, 2021, at a cost of $228,000 Management is considering the merits of using the diminishing balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $4,000 and an estimated useful life of either four years or 80,000 units Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,200 units in 2021:20.200 units in 2022 20,600 units in 2023, 20,000 units in 2024; and 5,000 units in 2025. Crane has a December 31 year end (a) Your answer is partially correct Prepare separate depreciation schedules for the life of the equipment using (Round depreciation per unit to 2 decimal places, es 5.28 and final answers to O decimal places, eg 5.275) Straight line method Year 2021 S 2022 2023 2024 2025 Depreciable Amount 22:4000 Depreciation Expense Accumulated Depreciation Carrying Amount
Transcribed Image Text:Crane Company purchased equipment on March 31, 2021, at a cost of $228,000 Management is considering the merits of using the diminishing balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $4,000 and an estimated useful life of either four years or 80,000 units Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,200 units in 2021:20.200 units in 2022 20,600 units in 2023, 20,000 units in 2024; and 5,000 units in 2025. Crane has a December 31 year end (a) Your answer is partially correct Prepare separate depreciation schedules for the life of the equipment using (Round depreciation per unit to 2 decimal places, es 5.28 and final answers to O decimal places, eg 5.275) Straight line method Year 2021 S 2022 2023 2024 2025 Depreciable Amount 22:4000 Depreciation Expense Accumulated Depreciation Carrying Amount
Double-diminishing-balance method Year 2021 S 2022 2023 2024 2025 2021 2022 2023 Opening Carrying Amount Units-of-production method 2024 228000 Year Units-of-Production 2025 114000 57000 28500 14200 $ 20200 20600 20000 5000 Depreciation Expense DOOOO 114000 $ Depreciation Expense 57000 28500 14250 10250 Accumulated Depreciation 114000 171000 DODON DON 199500 213750 224000 Carrying Amount Accumulated Depreciation 228000 Carrying Amount 114000 57000 28500 14250 4000 00000 1000
Transcribed Image Text:Double-diminishing-balance method Year 2021 S 2022 2023 2024 2025 2021 2022 2023 Opening Carrying Amount Units-of-production method 2024 228000 Year Units-of-Production 2025 114000 57000 28500 14200 $ 20200 20600 20000 5000 Depreciation Expense DOOOO 114000 $ Depreciation Expense 57000 28500 14250 10250 Accumulated Depreciation 114000 171000 DODON DON 199500 213750 224000 Carrying Amount Accumulated Depreciation 228000 Carrying Amount 114000 57000 28500 14250 4000 00000 1000
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