Question

K Excel Assignment #1 - Instructions and Te... On January 1, 2018 Friendly Farm Company purchased a new machine at a cost of $350,000. The machine has an estimated useful life of 4 years or 100,000 hours and residual value of $30,000. The machine will be used 30,000 hours in year 1, 40,000 hours in year 2, 20,000 hours in year 3 and 10,000 hours in year 4. Requirements: Prepare a depreciation schedule using each of the three methods: Straight line, Units of Production and Double Declining Balance. You may use the template I have attached here or you may create your own depreciation schedules using your textbook as a guideline. Do all mathematical computations in Excel when you can. Don't use a calculator and "type" the number in. That's not letting the spreadsheet do the work. Save the assignment with an xls or xlsx extension and upload the assignment in ASSIGNMENTS in Canvas.

Answer 1

Ans 1 Straight Line Depreciation Schedule Straight line depreciation = (Initial Cost-Salvage Value) / Estimated useful life %3D Depreciation for the year Accumulated Depreciation Depreciable Cost Useful Life Book Value Year Asset Cost Depreciation Expense $3,50,000 1-01-2018 12-31-2018 12-31-2019 12-31-2020 |12-31-2021 $80,000 $2,70,000 $1,60,000 $1,90,000 $2,40,000 $1,10,000 $3,20,000 $3,20,000 / $2,40,000 / $1,60,000 / $80,000 / $80,000 $80,000 $80,000 $80,000 4 = 2 $30,000 !! Ans 2 Unit of Production depreciation Estimated operate 100000 hours (Initial Cost-Salvage Value) / Estimated units production = Depreciation per unit [($350000-$30000)/100000] = $ 3.20 per hour %3! Depreciation for the year Depreciable Per Number of Depreciation Accumulated Book Value Date Asset Cost Unit units Expense (B) Depreciation (A) - (C) (A) $3,50,000 (C) 1-01-2018 $96,000 $2,54,000 $2,24,000 $1,26,000 $2,88,000 $3,20,000 $3.20 x $3.20 x $3.20 x $3.20 x $96,000 $1,28,000 $64,000 $32,000 12-31-2018 30000 12-31-2019 12-31-2020 12-31-2021 40000 %3! $62,000 $30,000 20000 10000 !! Ans 3 Double Declining Balance Method (DDBM) = 2/Useful Life* Book Value Depreciation for the year Depreciation Accumulated Book Value DDB rate Book Value Date Asset Cost Depreciation Expense $3,50,000 1-01-2018 12-31-2018 12-31-2019 12-31-2020 12-31-2021 In the year 2021, Depreciation of $13750 instead of $21875 based on DDB rate to restrcict the closing book value $1,75,000 $1,75,000 $2,62,500 $3,06,250 $3,20,000 $3,50,000 x $1,75,000 x $87,500 x $1,75,000 $87,500 $43,750 $13,750 0.50 $87,500 $43,750 $30,000 0.50 0.50 %3D to its salvage value.