Question

Required information [The following information applies to the questions displayed below.] Exact Photo Service purchased a new color printer at the beginning of Year 1 for $39,320. The printer is expected to have a four-year useful life and a $3,700 salvage value. The expected print production is estimated at $1,778,400 pages. Actual print production for the four years was as follows: Year 1 555,000 Year 2 482,200 Year 3 375,700 Year 4 388,500 Total 1,801,400 The printer was sold at the end of Year 4 for $3,850.

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

	Depreciation Expense Year 1 Year 2 Year 3 Year 4 Total accumulated depreciation $0

Compute the depreciation expense for each of the four years, using units-of-production depreciation. (Round cost per unit to three decimal places and final answers to the nearest whole dollar amount.)

	Depreciation Expense Year 1 Year 2 Year 3 Year 4 Total accumulated depreciation $0

c. Calculate the amount of gain or loss from the sale of the asset under each of the depreciation methods.

	DDB Units-of-production

Answer 1

a)Calculation of depreciation exp under double decline method
Rate of depreciation = 1/4yr*2 = 50%
YR1	39320*50%		19660
YR2	(39320-19660)*50%		9830
YR3	(39320-19660-9830)*50%		4915
YR4	(39320-3700-19660-9830-4915)		1215
total			35620
book value = 39320-35620 = 3700
b) Calculation of depreciation exp under Unit of production method
unit of production rate = (39320-3700)/1778400 =0.020029
YR1	555000	0.020029	11116
YR2	482200	0.020029	9658
YR3	375700	0.020029	7525
YR4	388500	0.020029	7781
total	1801400		36080
Book value = 39320-36080 = 3240
c) Calculation of amount of gain or loss from sale od assets
Method		Sale value	Book value	gain/loss
Double decline		3850	3700	150
unit of production		3850	3240	610