Winsey Company purchased equipment on January 2, 2019, for $700,000. The equipment has the following characteristics: Estimated service life 20 years, 100,000 hours, 950,000 units of output Estimated residual value $50,000 During 2019 and 2020, the company used the machine for 4,500 and 5,500 hours, respectively, and produced 40,000 and 60,000 units, respectively. Required: Compute depreciation expense for 2019 under each of the following methods: Round the depreciation rate per hour to 3 decimal places and depreciation rate per unit to 2 decimal places. If required, round your final answers to the nearest dollar. 1. Straight-line method $ fill in the blank 1 2. Activity method based on hours worked $ fill in the blank 2 3. Activity method based on units of output $ fill in the blank 3 4. Sum-of-the-years'-digits method $ fill in the blank 4 5. Double-declining-balance method $ fill in the blank 5 6. 150%-declining-balance method $ fill in the blank 6 Compute depreciation expense for 2020 under each of the following methods: Round the depreciation rate per hour to 3 decimal places and depreciation rate per unit to 2 decimal places. If required, round your final answers to the nearest dollar. 1. Straight-line method $ fill in the blank 7 2. Activity method based on hours worked $ fill in the blank 8 3. Activity method based on units of output $ fill in the blank 9 4. Sum-of-the-years'-digits method $ fill in the blank 10 5. Double-declining-balance method $ fill in the blank 11 6. 150%-declining-balance method $ fill in the blank 12 7. Next Level If Winsey used a service life of 16 years, 80,000 hours, or 750,000 units of output, what would be the effect on depreciation expense under the straight-line, sum-of-the-years'-digits, and declining-balance depreciation methods? If required, round your answers to the nearest dollar. 2019 2020 Straight-line method $ fill in the blank 13 $ fill in the blank 14 Activity method based on hours worked $ fill in the blank 15 $ fill in the blank 16 Activity method based on units of output $ fill in the blank 17 $ fill in the blank 18 Sum-of-the-years'-digits method $ fill in the blank 19 $ fill in the blank 20 Double-declining-balance method $ fill in the blank 21 $ fill in the blank 22 150%-declining-balance method $ fill in the blank 23 $ fill in the blank 24
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.
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Winsey Company purchased equipment on January 2, 2019, for $700,000. The equipment has the following characteristics:
Estimated service life 20 years, 100,000 hours, 950,000 units of output Estimated residual value $50,000 During 2019 and 2020, the company used the machine for 4,500 and 5,500 hours, respectively, and produced 40,000 and 60,000 units, respectively.
Required:
Compute
depreciation expense for 2019 under each of the following methods:Round the depreciation rate per hour to 3 decimal places and depreciation rate per unit to 2 decimal places. If required, round your final answers to the nearest dollar.
1. Straight-line method $ fill in the blank 1 2. Activity method based on hours worked $ fill in the blank 2 3. Activity method based on units of output $ fill in the blank 3 4. Sum-of-the-years'-digits method $ fill in the blank 4 5. Double-declining-balance method $ fill in the blank 5 6. 150%-declining-balance method $ fill in the blank 6
Compute depreciation expense for 2020 under each of the following methods:
Round the depreciation rate per hour to 3 decimal places and depreciation rate per unit to 2 decimal places. If required, round your final answers to the nearest dollar.
1. Straight-line method $ fill in the blank 7 2. Activity method based on hours worked $ fill in the blank 8 3. Activity method based on units of output $ fill in the blank 9 4. Sum-of-the-years'-digits method $ fill in the blank 10 5. Double-declining-balance method $ fill in the blank 11 6. 150%-declining-balance method $ fill in the blank 12
7. Next Level If Winsey used a service life of 16 years, 80,000 hours, or 750,000 units of output, what would be the effect on depreciation expense under the straight-line, sum-of-the-years'-digits, and declining-balance depreciation methods?
If required, round your answers to the nearest dollar.
2019 2020 Straight-line method $ fill in the blank 13 $ fill in the blank 14 Activity method based on hours worked $ fill in the blank 15 $ fill in the blank 16 Activity method based on units of output $ fill in the blank 17 $ fill in the blank 18 Sum-of-the-years'-digits method $ fill in the blank 19 $ fill in the blank 20 Double-declining-balance method $ fill in the blank 21 $ fill in the blank 22 150%-declining-balance method $ fill in the blank 23 $ fill in the blank 24
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