Question

Required information Problem 7-5A Determine depreciation under three methods (L07-4) The following information applies to the questions displayed below.) University Car Wash built a deluxe car wash across the street from campus. The new machines cost $210,000 including Installation. The company estimates that the equipment will have a residual value of $19.500. University Car Wash also estimates it will use the machine for six years or about 12.500 total hours. Actual use per year was as follows: Year Hours Used 3,100 1.100 1.200 2,800 2.6ee 1,700 Problem 7-5A Part 1 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculation UNIVERSITY CAR WASH Depreciation Schedule-Straight-Line End of year amounts Depreciation Accumulated Book Value Expense Depreciation Total

Answer 1

Cost of the Machine 210000 Less: salvage Value 19500 Depreciatble Value 190500 Estmated Life 12500 Units Straight Line Method Annual Depreciation : Depreciable Value / Life Depreciation Per annuam : 190500/6 31750 Depreciation Accumulated Year Expenses Depreciation Book Value 31750 31750 178250 31750 63500 146500 3 31750 95250 114750 31750 127000 83000 31750 158750 51250 31750 190500 1 9500 Total 190500 نرانيان | طراد |

62222 Double Decline Method Annual Depreciation : 1/Life *2 Depreciation Rate :(1/6)*2 33% Depreciation Expenses Accumulated Book value @33% Depreciation Bookvale 210000 70000 70000 140000 140000 46667 116667 93333 93333 31111 147778 62222 20741 168519 41481 41481 13827 182346 27654 27654 8154 190500 19500 Depreciation Accumulated Year Expenses Depreciation Book Value 70000 70000 140000 2 46667 116667 93333 31111 147778 62222 20741 168519 41481 13827 182346 27654 8154 190500 19500 Total 190500

Activity Based Method Annual Depreciation : Depreciable Value / Life Depreciation Per unit :190500/12500 15.24 Year Units Rate Depreciation 3100 15.24 47244 2 1100 15.24 16764 1200 15.24 18288 2800 15.24 42672 2600 15.24 39624 1700 15.24 25908 Depreciation Accumulated Year Expenses Depreciation Book Value 47244 47244 162756 16764 64008 145992 3 18288 82296 127704 4 42672 124968 85032 5 39624 164592 45408 6 25908 190500 1 9500 Total 190500 WN