Question

Required information [The following information applies to the questions displayed below.] Cheetah Copy purchased a new copy machine. The new machine cost $108,000 including installation. The company estimates the equipment will have a residual value of $27,000. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Hours Used Year 1 3,000 2,000 1,600 2,400 2 3 4 Required: 1. Prepare a depreciation schedule for four years using the straight-line method. (Do not round your intermediate calculations.) CHEETAH CОPY Depreciation Schedule-Straight-Line End of Year Amounts Accumulated Depreciation Expense Year Book Value Depreciation 1 2 3 4 Total

Answer 1

Correct Answer:

Year	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$                 20,250.00	$           87,750.00	$      20,250.00
2	$                 20,250.00	$           67,500.00	$      40,500.00
3	$                 20,250.00	$           47,250.00	$      60,750.00
4	$                 20,250.00	$           27,000.00	$      81,000.00

Working:

Straight line Method
A	Cost	$               108,000.00
B	Residual Value	$                 27,000.00
C=A - B	Depreciable base	$                 81,000.00
D	Life [in years]	4
E=C/D	Annual SLM depreciation	$                 20,250.00

Year	Beginning Book Value	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$ 108,000.00	$                 20,250.00	$           87,750.00	$      20,250.00
2	$    87,750.00	$                 20,250.00	$           67,500.00	$      40,500.00
3	$    67,500.00	$                 20,250.00	$           47,250.00	$      60,750.00
4	$    47,250.00	$                 20,250.00	$           27,000.00	$     81,000.00

End of answer.

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