Quick Producers acquired factory equipment on March 1 of Year 1 costing $39,000 . In view of pending technological developments, it is estimated that the equipment will have an $8,000 resale value upon disposal in four years and that disposal costs will be $500. Data relating to the equipment follow.Estimated Service LifeYears4Service hours20,000 Calendar YearActual Service HoursYear 14,700Year 25,000Year 34,800Year 44,400Year 51,000 RequiredCompute depreciation expense each year for the life of the asset assuming (1) units-of-production, (2) straight-line, (3) sum-of-the-years’-digits, and (4) double-declining-balance depreciation.●Note: Round depreciation expense to the nearest whole dollar1. Units-of-Production●Note: Do not use negative signs with any of your answers. Numerator Denominator ResultDepreciation per UnitAnswer ÷Answer = ●Note: Use the result EXACTLY as displayed above in the calculations below. Depreciation for the Period ReportingUnits ofDepreciation perDepreciation PeriodOutputUnitExpense Dec. 31, Year 1Answer Answer Answer Dec. 31, Year 2Answer Answer Dec. 31, Year 3Answer Answer Dec. 31, Year 4Answer Answer Dec. 31, Year 5Answer Answer 2. Straight-Line ReportingDepreciation PeriodExpense Dec. 31, Year 1Answer Dec. 31, Year 2Answer Dec. 31, Year 3Answer Dec. 31, Year 4Answer Dec. 31, Year 5Answer 3. Sum-of-the-Years'-DigitsReportingDepreciationPeriodExpenseDec. 31, Year 1Answer Dec. 31, Year 2Answer Dec. 31, Year 3Answer Dec. 31, Year 4Answer Dec. 31, Year 5Answer 4. Double-Declining BalanceReportingDepreciationPeriodExpenseDec. 31, Year 1Answer Dec. 31, Year 2Answer Dec. 31, Year 3Answer Dec. 31, Year 4Answer Dec. 31, Year 5Answer

Depreciation is considered as the reduction of the asset. The deprecation is considered as an…

Answered: Quick Producers acquired factory…

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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Question

Quick Producers acquired factory equipment on March 1 of Year 1 costing $39,000 . In view of pending technological developments, it is estimated that the equipment will have an $8,000 resale value upon disposal in four years and that disposal costs will be $500. Data relating to the equipment follow.

Estimated Service Life
Years	4
Service hours	20,000

Calendar Year	Actual Service Hours
Year 1	4,700
Year 2	5,000
Year 3	4,800
Year 4	4,400
Year 5	1,000

Required

Compute depreciation expense each year for the life of the asset assuming (1) units-of-production, (2) straight-line, (3) sum-of-the-years’-digits, and (4) double-declining-balance depreciation.
●Note: Round depreciation expense to the nearest whole dollar

1. Units-of-Production
●Note: Do not use negative signs with any of your answers.

	Numerator		Denominator		Result
Depreciation per Unit	Answer	÷	Answer	=

●Note: Use the result EXACTLY as displayed above in the calculations below.

	Depreciation for the Period
Reporting	Units of	Depreciation per	Depreciation
Period	Output	Unit	Expense
Dec. 31, Year 1	Answer	Answer	Answer
Dec. 31, Year 2	Answer		Answer
Dec. 31, Year 3	Answer		Answer
Dec. 31, Year 4	Answer		Answer
Dec. 31, Year 5	Answer		Answer

2. Straight-Line

	Reporting	Depreciation
	Period	Expense
	Dec. 31, Year 1	Answer
	Dec. 31, Year 2	Answer
	Dec. 31, Year 3	Answer
	Dec. 31, Year 4	Answer
	Dec. 31, Year 5	Answer

3. Sum-of-the-Years'-Digits

Reporting	Depreciation
Period	Expense
Dec. 31, Year 1	Answer
Dec. 31, Year 2	Answer
Dec. 31, Year 3	Answer
Dec. 31, Year 4	Answer
Dec. 31, Year 5	Answer

4. Double-Declining Balance

Reporting	Depreciation
Period	Expense
Dec. 31, Year 1	Answer
Dec. 31, Year 2	Answer
Dec. 31, Year 3	Answer
Dec. 31, Year 4	Answer
Dec. 31, Year 5	Answer

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