Question

Exact Photo Service purchased a new color printer at the beginning of 2018 for $38,700. The printer is expected to have a four-year useful life and a $1,548 salvage value. The expected print production is estimated at 1,500,000 pages. Actual print production for the four years was as follows: 2018 2019 2020 2021 Total 549,500 479,500 383,400 386,600 1,799,000 The printer was sold at the end of 2021 for $1.748 Required a. Compute the depreciation expense for each of the four years, using double-declining balance depreciation (Do not round your intermediate calculations. Round final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "0" wherever required.) Double-Declining Balance 2018 2019 2020 2021

Answer 1

a.

	Double-Declining Balance	Working
2018	19350	$38700 x 50%
2019	9675	($38700 - $19350) x 50%
2020	4838	($38700 - $19350 - $9675) x 50%
2021	3289	($38700 - $19350 - $9675 - $4838 - $1548)

Straight-line depreciation rate = 100%/4 years = 25%

Double declining balance depreciation rate = 2 x 25% = 50%

b.

	Units-of-Production	Working
2018	13738	549500 x $0.025
2019	11988	479500 x $0.025
2020	9585	383400 x $0.025
2021	1841	$38700 - $1548 - $13738 - $11988 - $9585

Depreciation cost per unit = (Cost - Salvage value)/Estimated output = ($38700 - $1548)/1500000 = $37152/1500000 = $0.025

c.

Depreciation Methods	Amount	Effect
Double-Declining Balance	200	Gain
Units-of-Production	200	Gain

Gain = Sale proceeds - Book value = $1748 - $1548 = $200