Question

Golden Fried Chicken bought equipment on January 2, 2018, for $21,000. The equipment was expected to remain in service for four years and to operate for 6,000 hours. At the end of the equipment's useful life, Golden estimates that its residual value will be $3,000. The equipment operated for 600 hours the first year, 1,800 hours the second year, 2,400 hours the third year, and 1,200 hours the fourth year. Read the requirements. $ Requirement 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared. Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Depreciation for the Year Asset Depreciable Useful Depreciation Accumulated Book Date Cost | Cost Life Expense Depreciation Value 1-2-2018 $ 21,000 21,000 12-31-2018 18,000/ 4 years = $ 4,500 $ 4,500 16,500 12-31-2019 18,000/ 4 years 4,500 9,000 12,000 12-31-2020 18,000/ 4 years 4,500 13,500 7,500 12-31-2021 18,000/ 4 years 4,500 18,000 3,000 Before calculating the units-of-production depreciation schedule, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation expense per unit. Cost - Residual value 1 Useful life in units = Depreciation per unit ($ 21,000 $ 3,000 6,000 Prepare a depreciation schedule using the units-of-production method. Units-of-Production Depreciation Schedule Depreciation for the Year Asset Depreciation Number of Depreciation Accumulated Book Date Cost Per Unit Units Expense Depreciation Value 1-2-2018 $ 21,000 12-31-2018 12-31-2019 12-31-2020 3 x 12-31-2021 3 x = نن نن نن ن

Answer 1

Req 1)
Straight line depreciation Schedule:
		Depreciation for the Year
date	Asset Cost	depreciable cost	Useful life	Dep. Exp.	Accu. Dep.	Book Value
1/2/2018	21000					21000
12/31/2018		18000	4	4500	4500	16500
12/31/2019		18000	4	4500	9000	12000
12/31/2020		18000	4	4500	13500	7500
12/31/2021		18000	4	4500	18000	3000
Units of production depreciation schedule:
Depreciation per hour: (cost - residual value)/ useful life = $3 per hour
		Depreciation for the Year
date	Asset Cost	Dep per hour	Hours operated	Dep. Exp.	Accu. Dep.	Book Value
1/2/2018	21000					21000
12/31/2018		3	600	1800	1800	19200
12/31/2019		3	1800	5400	7200	13800
12/31/2020		3	2400	7200	14400	6600
12/31/2021		3	1200	3600	18000	3000
Double declining depreciation Schedule:
Depreciation rate = Straight line * 2 = (100/4)% * 2 = 50%
		Depreciation for the Year
date	Asset Cost	depreciable cost	Dep rate	Dep. Exp.	Accu. Dep.	Book Value
1/2/2018	21000					21000
12/31/2018		21000	50%	10500	10500	10500
12/31/2019		10500	50%	5250	15750	5250
12/31/2020		5250	50%	2250	18000	3000
12/31/2021				0	18000	3000