Chapter 6, Problem 6.28P

To determine

Concept Introduction:

Straight line method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows:

  $AnnualStraightlinedepreciation=\frac{\left(Cost-SalvageValue\right)}{Estimatedlifeinyears}$

Double Declining balance method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method, the depreciation is calculated on the beginning book value of depreciation using a depreciation rate. The depreciation rate is calculated with the help of following formula:

  $Doubledecliningdepreciationrate= \frac{2}{Expectedlifeinyears}$

Units of Production method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset is allocated on the basis of unit of production during its estimated life. The formula to calculate the deprecation under units of production method is as follows:

  $Depreciation=\frac{\left(Cost-SalvageValue\right)\times Unitsfortheperiod}{Estimatedlifeinunits}$

Requirement-a:

To Calculate:

The amount of depreciation expense for the year 2017

To determine

Concept Introduction:

Straight line method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows:

  $AnnualStraightlinedepreciation=\frac{\left(Cost-SalvageValue\right)}{Estimatedlifeinyears}$

Double Declining balance method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method, the depreciation is calculated on the beginning book value of depreciation using a depreciation rate. The depreciation rate is calculated with the help of following formula:

  $Doubledecliningdepreciationrate= \frac{2}{Expectedlifeinyears}$

Units of Production method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset is allocated on the basis of unit of production during its estimated life. The formula to calculate the deprecation under units of production method is as follows:

  $Depreciation=\frac{\left(Cost-SalvageValue\right)\times Unitsfortheperiod}{Estimatedlifeinunits}$

Requirement-b:

To Calculate:

1. The original cost of the equipment
2. Depreciation method being used
3. Date of acquisition of the equipment

To determine

Concept Introduction:

Straight line method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset it divided equally for each year f its estimated life. The formula to calculate the deprecation under straight line method is as follows:

  $AnnualStraightlinedepreciation=\frac{\left(Cost-SalvageValue\right)}{Estimatedlifeinyears}$

Double Declining balance method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method, the depreciation is calculated on the beginning book value of depreciation using a depreciation rate. The depreciation rate is calculated with the help of following formula:

  $Doubledecliningdepreciationrate= \frac{2}{Expectedlifeinyears}$

Units of Production method of depreciation: This is one of the methods to calculate the depreciation on assets. Under this method the depreciable value of asset is allocated on the basis of unit of production during its estimated life. The formula to calculate the deprecation under units of production method is as follows:

  $Depreciation=\frac{\left(Cost-SalvageValue\right)\times Unitsfortheperiod}{Estimatedlifeinunits}$

Requirement-c:

To Prepare:

The journal entry for sale of the equipment