Schilling Corporation purchased a machine on January 1, 2018, at a total cost of $900,000. The machine has an estimated useful life of 10 years or 1,000,000 units of output and a salvage value of $150,000. Instructions: Complete the following table by presenting the annual depreciation expense for the years 2018 and 2019, under the indicated depreciation methods. Assume actual activity in terms of units of output was: 2018—60,000 units and 2019—120,000 units. ——————————————————————————————————————— Annual Depreciation Expense 2018 2019 ——————————————————————————————————————— Straight-Line: $ $ ——————————————————————————————————————— (Supporting Computations) ——————————————————————————————————————— Double-Declining-Balance: $ $ ——————————————————————————————————————— (Supporting Computations) ——————————————————————————————————————— Units-of-Activity: $ $ ——————————————————————————————————————— (Supporting Computations)
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.
Schilling Corporation purchased a machine on January 1, 2018, at a total cost of $900,000. The machine has an estimated useful life of 10 years or 1,000,000 units of output and a salvage value of $150,000.
Instructions: Complete the following table by presenting the annual
———————————————————————————————————————
Annual Depreciation Expense
2018 2019
———————————————————————————————————————
Straight-Line: $ $
———————————————————————————————————————
(Supporting Computations)
———————————————————————————————————————
Double-Declining-Balance: $ $
———————————————————————————————————————
(Supporting Computations)
———————————————————————————————————————
Units-of-Activity: $ $
———————————————————————————————————————
(Supporting Computations)
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