Question

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 о при ме Hours Used 3,100 1,100 1,200 2,800 2,600 1,200 3. Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.) UNIVERSITY CAR WASH Depreciation Schedule—Activity-Based End of year amounts Depreciation Accumulated Expense Book Value Depreciation Year Total

Answer 1

Depreciation rate = (Cost - Salvage value) /Useful life in hours

= (270,000-24,000)/12000 = 20.5 per hour

Year	Depreciation Expenses	Accumulated Depreciation	Book value
1	63550	63550	206,450
2	22550	86100	183,900
3	24600	110,700	159,300
4	57400	168,100	101,900
5	53300	221,400	48,600
6	24600	246,000	24,000
Total	246,000

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