Question

Required information The following information applies to the questions displayed below) University Car Wash built a deluxe car wash across the street from campus. The new machines cost $237,000 including Installation. The company estimates that the equipment will have a residual value of $28,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: WN Hours Used 2,700 2,000 2,100 1,900 1,700 2,100 repare a depreciation schedule for six years using the double-declining balance method. (Do not round your intermediate ulations.) UNIVERSITY CAR WASH

Answer 1

Depreciation under double declining balance method = (Cost - Accumulated depreciation) / Useful life * 2

UNIVERSITY CAR WASH

Depreciation Schedule - Double Declining Balance

End of year amounts

Year	Depreciation expense	Accumulated depreciation	Book value
1	$79,000 [($237,000-$0)/6*2]	$79,000	$158,000 ($237,000-$79,000)
2	$52,667 [($237,000-$79,000)/6*2]	$131,667 ($79,000+$52,667)	$105,333 ($237,000-$131,667)
3	$35,111 [($237,000-$131,667)/6*2]	$166,778 ($131,667+$35,111)	$70,222 ($237,000-$166,778)
4	$23,407 [($237,000-$166,778)/6*2]	$190,185 ($166,778+$23,407)	$46,815 ($237,000-$190,185)
5	$15,605 [($237,000-$190,185)/6*2]	$205,790 ($190,185+$15,605)	$31,210($237,000-$205,790)
6	$2,710 (*)	$208,500 ($205,790+$2,710)	$28,500 ($237,000-$208,500)

(*) Under double declining balance method, depreciation cannot be made below the salvage value, Depreciation in the year 6 is limited to $2,710.