Question

West Coast Tours runs boat tours along the west coast of British Columbia. On March 5, 2020, it purchased, with cash, a cruising boat for $942,000, having a useful life of 10 years or 13,860 hours, with a residual value of $249,000. The company's year-end is December 31. Required: Calculate depreciation expense for the fiscal years 2020, 2021, and 2022 by completing a schedule. (Note: Depreciation is calculated to the nearest month. Assume actual hours of service were: 2020, 910; 2021, 1,970; 2022, 1,725.) se for the fiscal years 2020, 2021, and 2022 by completing a schedule. (Note points ( 8 02:15:12 Depreciation Method Double-Declining Straight-Line Balance Year Units-of- Production Skipped 2020 2021 2022

Answer 1

	Depreciation method
Year	Straight line	Double Declining balance	Units of Production
2020	57750	157000	45500
2021	69300	157000	98500
2022	69300	125600	86250

Workings:
In 2020, Depreciation will be for 10 months
Straight line:
Cost	942000
Less: Residual value	249000
Depreciable cost	693000
Divide by Useful life	10
Annual Depreciation	69300
2020 Depreciation	57750	=69300*10/12
Double Declining balance:
Depreciation rate	20%	=1/10*2
2020 Depreciation	157000	=942000*20%*10/12
2021 Depreciation	157000	=(942000-157000)*20%
2022 Depreciation	125600	=(942000-157000-157000)*20%
Units of Production:
Cost	942000
Less: Residual value	249000
Depreciable cost	693000
Divide by Total hours	13860
Depreciation per hour	50
2020 Depreciation	45500	=910*50
2021 Depreciation	98500	=1970*50
2022 Depreciation	86250	=1725*50