To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided. Cost and residual value Estimated service life Acquisition cost $62,500 Years 5 Residual value $2,500 Service hours 50,000 Productive output (units) 120,000
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided. Cost and residual value Estimated service life Acquisition cost $62,500 Years 5 Residual value $2,500 Service hours 50,000 Productive output (units) 120,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Computing Partial Period
To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.
| Cost and residual value | Estimated service life | ||
| Acquisition cost | $62,500 | Years | 5 |
| Residual value | $2,500 | Service hours | 50,000 |
| Productive output (units) | 120,000 |
d. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
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e. Double-declining-balance method: Compute the depreciation amount for each year.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
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Required
Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1, 2020.
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