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Required information [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 $270,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 3,100 1,100 1,200 2,800 2,600 2 4 6 1,200 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.) UNIVERSITY CAR WASH Depreciation Schedule-Straight-Line End of year amounts Depreciation Expense Accumulated Year Book Value Depreciation 2 4 5 6 Total LOO

Answer 1

Depreciation expense = (Cost - Salvage value) /Useful life

= (270,000-24,000)/6 = 41,000

Year	Depreciation Expense	Accumulated Depreciation	Book value
1	41,000	41,000	229,000
2	41,000	82,000	188,000
3	41,000	123,000	147,000
4	41,000	164,000	106,000
5	41,000	205,000	65,000
6	41,000	246,000	24,000
Total	246,000

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