Question

[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 $267,000 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 3,000 1,200 1,300 2,700 2,500 1,300 6 N m LO O

Answer 1

Double Decline Method Annual Depreciation : 1/Life *2 Depreciation Rate :(1/6)*2 33% Depreciation Accumulated Expenses Bookvale Book value @33% Depreciation 89000 267000 89000 178000 59333 118667 178000 148333 39556 187889 118667 79111 26370 214259 52741 79111 52741 17580 205469 35160 35160 11160 216630 24000 Depreciation Accumulated Expense Depreciation Book Value Year 89000 1 89000 178000 59333 118667 2 148333 39556 3 187889 79111 214259 52741 4 26370 5 17580 35160 231840 6 11160 243000 24000

Units of Prodcution Annual Depreciation : Depreciable Value Life Depreciation Per unit : 243000/12000 20.25 Year Units Depreciation Rate 3000 1 20.25 60750 20.25 2 1200 24300 1300 20.25 3 26325 20.25 4 2700 54675 5 2500 20.25 50625 20.25 1300 26325 Depreciation|Accumulated Expenses Depreciation Book Value Year At Acquisition 60750 60750 206250 1 85050 181950 2 24300 26325 111375 155625 3 54675 166050 100950 4 5 50625 216675 50325 243000 26325 6 24000

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