Question

Cracking Fried Chicken bought equipment on January 2, 2018, for $42 000. The equipment was expected to remain in service for four years and to open for 12.000 hour. Al the end of the equipment's useful life Crackling estimates that its residual value will be $6,000. The equipment operated for 1.200 hours the frst year. 3.800 hours the second year, 4.800 hours the third year, and 2.400 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-ine, 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 12-31-2018

Answer 1

Cost = $ 42000 Estimated life = 4years Residual value = $ 6000 Straight line method Cost - Residual Value Depreciation per year 42000 - 6000 = $9000 each year. Year Book Value @ Beginning Depreciation amount Accumalated depreciation Bu@ end 9000 A wo 42000 33000 244000 1500D 9000 9000 9000 9000 18000 2700D 36000 330DO 24000 5000 6000

Units of production method. Depreciation houg per Cost - Residual value Total hours 42000 - 6000 12000 = $ 3 per bowy Year Hours operated (A) BV @ Beginning Depreciation ambunt C - $3XA Accumalated depreciation ID BV @ end E- B-C AWNE 1200 3600 4800 24700 42000 38400 27600 13200 3600 108 DD 14400 7200 3600 14400 28800 36000 3 8400 27600 13200 6000 Double declining balance method Depreciation Rate = 1002 50% Year By @ Beginning Depreciation Dep. tate amount Acum alates depreciation BV @ end 501 21000 21000 50-1: + Wo 42000 21000 TO DO 5250 IDSDD 5250 2625 50-4 50./ 21000 10 500 5250 2625 31 SDO 36750 39375

But the residual Value and by double declining got $ 2625 estimated is $6000 balance we have So, actually to be the amount of depreciation charged in year 344 Year BV @ Dep. amount Accumulated depreciation B=A-D BV @ End Beginping 4500 AW 10500 GODD 36000 3600D 6000 6000 The method closely is because as usage of is high that tracks the wear & tear unite the production method the production increases the equipment in croases & thus there wear & tear todo

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