Question

On January 1, 2021, the Allegheny Corporation purchased equipment for $116,000. The estimated service life of the equipment is 10 years and the estimated residual value is $6,000. The equipment is expected to produce 260,000 units during its life.

Required:
Calculate depreciation for 2021 and 2022 using each of the following methods.

Straight Line Method

	Straight-Line Depreciation Choose Numerator: / Choose Denominator: = Annual Depreciation Expense / = Depreciation Expense / = Depreciation Expense 2021 2022

Double-declining balance.

	Depreciation for the Period End of Period Annual Period Beginning of Period Book Value Depreciation Rate (%) Depreciation Expense Accumulated Depreciation Book Value 2021 $0 2022 $0 $0

Answer 1

Solution: Straight line method: Depreciation enpense cost - Residual value Estimated useful life For 2021 o n $ 116000-6000 = $ 11000 10 For 2022 $ 116000-6000 $ 11000

Double decling balance method Depreciation rate Хор 2 Estimated useful life a = 2 x 100 10 2oy. Fox 2021 Deprecation enpense cast x 20% - 116000 X 20% $ 23200 000 1 For 2022 Book vame at the begining [116000-23200) & 92800 Depreciation enpense & 92800X2011 $ 18560