Question

Exact Photo Service purchased a new color printer at the beginning of 2018 for $38,000. The printer is expected to have a four-year useful life and a $3,500 salvage value. The expected print production is estimated at 1,500,000 pages. Actual print production for the four years was as follows:

2018	390,000
2019	410,000
2020	420,000
2021	300,000
Total	1,520,000

The printer was sold at the end of 2021 for $1,650.

A)

Compute the depreciation expense for each of the four years, using double-declining-balance depreciation. (Do not round your intermediate calculations. Round final answers to the nearest whole dollar amount.)

Double Declining Balance
2018:
2019:
2020:
2021:

B)

Compute the depreciation expense for each of the four years, using units-of-production depreciation. (Round cost per unit to three decimal places.)

Units of Production
2018:
2019:
2020:
2021:

C)

3. Calculate the amount of gain or loss from the sale of the asset under each of the depreciation methods. (Amounts to be deducted should be indicated with minus sign.)

Double Declining Balance Amount : _________

Units of Production Amount: ____________

Answer 1

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Exact Photo Service
Answer A
Double Declining Method	Amount $	Note
Cost of printer	38,000.00	A
Life	4.00	B
Annual depreciation	9,500.00	C=A/B
Depreciation rate	25.00%	D=C/A
Double Depreciation %	50.00%	E=D*2
Depreciation for 2018	19,000.00	F=A*E
Book value at the end of 2018	19,000.00	G=A-F
Depreciation for 2019	9,500.00	H=G*E
Book value at the end of 2019	9,500.00	G=A-F
Depreciation for 2020	4,750.00	H=G*E
Book value at the end of 2020	4,750.00	I=G-H
Depreciation for 2021	2,375.00	J=I*E
Book value at the end of 2021	2,375.00	K=I-J
Answer C	Amount $
Book value at the end of 2021	2,375.00	See K
Less: Sale Value	1,650.00
Loss on sale	725.00
Answer B
Units of production method	Amount $	Note
Cost of printer	38,000.00	A
Less: Residual Value	3,500.00	B
Depreciable Value	34,500.00	C=A-B
Expected pages	1,500,000.00	D
Depreciation rate per page	0.023	E=C/D
Pages printed in 2018	390,000.00	F
Depreciation for 2018	8,970.00	G=F*E
Pages printed in 2019	410,000.00	H
Depreciation for 2019	9,430.00	I=H*E
Pages printed in 2020	420,000.00	J
Depreciation for 2020	9,660.00	K=J*E
Pages printed in 2021	300,000.00	L
Depreciation for 2021	6,900.00	M=L*E
Answer C	Amount $
Book value at the end of 2021	3,040.00	N=A-G-I-K-M
Less: Sale Value	1,650.00
Loss on sale	1,390.00