Question

E9-7 Computing Depreciation under Alternative Methods [LO 9-3) Sushi Corp. purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX at a cost of $32.400 The equipment has an estimated residual value of $2.100. The equipment is expected to process 276,000 payments over its three- year useful life. Per year, expected payment transactions are 66.240. year 1 151800. year 2, and 57.960 year 3. Required: Complete a depreciation schedule for each of the alternative methods 1. Straight-line 2 Units-of-production Complete this question by entering your answers Required 1 Required 2 Complete depreciation schedule for Straight-line method. (Do not found intermediate calculations.) noome Balance Sheet Depreciation Cost Accumulated Depreciation Don Value Required 2 >

Answer 1

1) straight line method

year	cost	depreciation expense	accumulated depreciation	book value
at acquisition	32,400	-	-	32,400
1	32,400	10,100	10,100	22,300
2	32,400	10,100	20,200	12,200
3	32,400	10,100	30,300	2,100

Depreciation = cost – residual value / useful life

= 32,400 – 2,100 / 3

= 10,100 per year

2) Units of production method

year	cost	transaction	rate of depreciation	depreciation expense	accumulated depreciation	book value
at acquisition	32,400	-	0.11	-	-	32,400
1	32,400	66,240	0.11	7,286	7,286	25,114
2	32,400	1,51,800	0.11	16,698	23,984	8,416
3	32,400	57,960	0.11	6,376	30,360	2,040

Depreciation rate = cost – residual value / useful life in transactions

= 32,400 – 2,100 / 276,000

= 0.11 per transaction