Question

a JUSaERan, H.. eBook Show Me How Calculator Print item Exercise 7-48 (Algorithmic) Depreciation Methods Berkshire Corporation purchased a copying machine for $9,800 on January 1, 2019. The machine's residual value was $1,175 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies in the first year and 460,000 in the second year. Required: 1. Compute depreciation expense for 2019 and 2020 using the: a. Straight-line method. Depreciation expense: : per year b. Double-declining-balance method. Depreciation Expense 2019 2020 c. Units-of-production method. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Depreciation Expense 2019 2020 2. For each depreciation method, what is the book value of the machine at the end of 2019? At the end of 2020? If required, round your answers to the nearest whole dollar. Previous Next Check My Work 2 more Check My Work uses remaining. 926 PM ENG 11/10/2019

Answer 1

1
a.	Straight-line method:
	Depreciation expense=(Cost-Residual value)/Expected life=(9800-1175)/5=8625/5=$ 1725 per year
b.	Double-declining-balance method:
	Depreciation rate=2*(1/Expected life)=2*(1/5)=2*0.2=0.4=40%
	Depreciation expense=Book value*Depreciation rate
	2019
	Book value at the beginning of year=Cost=$ 9800
	Depreciation expense=9800*40%=$ 3920
	2020
	Book value=Cost-Depreciation for 2019=9800-3920=$ 5880
	Depreciation expense=5880*40%=$ 2352
c.	Units-of-production method:
	Depreciation expense per copies=(Cost-Residual value)/Expected life in copies=(9800-1175)/2000000=8625/2000000=$ 0.0043125 per copy
	Depreciation expense=Actual usage*Depreciation expense per copies
	2019
	Depreciation expense=480000*0.0043125=$ 2070
	2020
	Depreciation expense=460000*0.0043125=$ 1984
2
a.	2019
	Book value=Cost-Depreciation expense for 2019=9800-1725=$ 8075
	2020
	Book value=Book value at the end of 2019-Depreciation expense for 2020=8075-1725=$ 6350
b.	2019
	Book value=Cost-Depreciation expense for 2019=9800-3920=$ 5880
	2020
	Book value=Book value at the end of 2019-Depreciation expense for 2020=5880-2352=$ 3528
c.	2019
	Book value=Cost-Depreciation expense for 2019=9800-2070=$ 7730
	2020
	Book value=Book value at the end of 2019-Depreciation expense for 2020=7730-1984=$ 5746
						2019	2020
	a.	Straight-line method				8075	6350
	b.	Double-declining-balance method				5880	3528
	c.	Units-of-production method				7730	5746
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