Rehearsal Corporation purchased equipment on Jan 1, 2020, for $250,000. The equipment was expected to have a useful life of three years , or 12,000 operating hours, and a residual value of $10,000. The equipment was used for 3,500 hours during 2020, 3,500 hours during 2021, and 5,000 hours in 2022. Instructions: Determine the amount of depreciation expense for the years ended December 31, 2020, 2021, and 2022, by (a) the straight-line method, (b) the units-of-production method, and ( c ) the double-declining-balance method. Round DDB Rate to two decimal places. Round final answers to the nearest dollar. SHOW YOUR WORK: Depreciation Expense Year Staight-Line
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.
Rehearsal Corporation purchased equipment on Jan 1, 2020, for $250,000. The equipment was expected to have a useful life of three years , or
12,000 operating hours, and a residual value of $10,000. The equipment was used for 3,500 hours during 2020, 3,500 hours during 2021, and 5,000 hours in 2022.
Instructions:
Determine the amount of
(b) the units-of-production method, and ( c ) the double-declining-balance method. Round DDB Rate to two decimal places. Round final answers to the nearest dollar.
SHOW YOUR WORK:
Depreciation Expense
Year Staight-Line
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
