Winebulance Co. purchased a new van on 1-1-2019 for Estimated salvage value Estimated useful life Estimated...
Homework Answers
Answer-1)- The depreciation expense for 2019= $20000.
The depreciation expense for 2020= $20000.
Explanation- Straight line Method-
= Cost of asset- Salvage value of asset/No. of useful life (years)
=($84000-$4000)/4 years
=$80000/ 4 years
= $20000
Year 2019 depreciation expense = $20000
Year 2020 depreciation expense = $20000
2)- The depreciation expense for 2019= $18500.
The depreciation expense for 2020= $22500.
Explanation- Units of activity method:-Annual depreciation expense per unit-
=Cost – salvage /Total miles driven
=($84000-$4000)/160000 miles
=$0.50 per mile
Depreciation expense in year 2019= Depreciation expense per hour* Hours used
=$0.50 per mile *37000 miles
=$18500
Depreciation expense in year 2020= Depreciation expense per hour* Hours used
=$0.50 per mile *45000 miles
=$22500
3)- The depreciation expense for 2019 = $33600.
The depreciation expense for 2020 = $25200.
Explanation- Double Declining balance depreciation is calculated using the following formula:
|
Depreciation = Depreciation Rate * Book Value of Asset |
Depreciation rate is given by the following formula:
|
Depreciation Rate = Accelerator *Straight Line Rate |
Straight-line Depreciation Rate = 1/4 = 0.25 = 25%
Declining Balance Rate = 2*25% = 50%
Diminishing balance method – Cost of equipment*Depreciation rate
Depreciation expense Year 2019 = $84000*40%
= $33600
Book value at the end of year 2019 = $84000-$33600 = $50400
Year 2019 Depreciation expense = $50400*50%= $25200
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