Question

Depreciation Methods - on January 2,2018, skyler, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. the machine cost $120,000 and its estimated useful life was four years or 920,000 cuttings, after which it could be sold for $5,000.

Cambridge Business Publishers Chapter 9 Accounting for Long-lived and Intangible Asses 451 Required Calculate each year's depreciation expense for the period 2018-2021 under each of the following depreciation methods: 1. Straight-line. 2. Double-declining balance. 3. Units-of-production. Assume annual production in cuttings of 200,000; 350.000; 260,000; and 110,000. b. Assume that the machine was purchased on July 1, 2018. Calculate each year's depreciation ex- pense for the period 2018-2022 under each of the following depreciation methods: 1. Straight-line. 2. Double-declining balance. -4A. Accounting for Plant Assets Ethan Corporation had the following transactions related to its delivery truck: L01, 2, Year 1 muck with an estimated useful life of four years and a

Answer 1

Part-1

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Useful Life		Depreciation	Accumulated	Book
year	Cost	Cost				Expense	Depreciation	Value
2018	$120,000.00
2018		$115,000.00	/	4	=	$28,750.00	$28,750.00	$91,250.00
2019		$115,000.00	/	4	=	$28,750.00	$57,500.00	$62,500.00
2020		$115,000.00	/	4	=	$28,750.00	$86,250.00	$33,750.00
2021		$115,000.00	/	4	=	$28,750.00	$115,000.00	$5,000.00
Depreciable cost =120000-5000
Depreciation per Unit = (Original Cost- Salvage Value)/ Estimated Unit				0.328
=(120000-5000)/920000 Unit=$0.125 per Unit
Units-of-Production Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciation		Number of		Depreciation	Accumulated	Book
Date	Cost	Per Unit		Unit		Expense	Depreciation	Value
2018	$120,000
2018		0.125	x	200000	=	$25,000	$25,000	$95,000.00
2019		0.125	x	350000	=	$43,750	$68,750	$51,250.00
2020		0.125	x	260000	=	$32,500	$101,250	$18,750.00
2021 (120000-5000-101250)			x		=	$13,750	$115,000	$5,000.00
Double-Declining-Balance Depreciation Schedule
		Depreciation for the Year
	Asset	Book		DDB		Depreciation	Accumulated	Book
Date	Cost	Value		Rate		Expense	Depreciation	Value
2018	$120,000
2018		$120,000	x	50%	=	$60,000	$60,000	$60,000
2019		$60,000	x	50%	=	$30,000	$90,000	$30,000
2020		$30,000	x	50%	=	$15,000	$105,000	$15,000
2021 (120000-105000-5000)		$15,000	x		=	$10,000	$115,000	$5,000
DDB Rate= 1/ Estimated Life X 2= 1/4X2= 50%

Part-2

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Useful Life		Depreciation	Accumulated	Book
year	Cost	Cost				Expense	Depreciation	Value
2018	$120,000.00
2018 (115000/4*6/12)		$115,000.00	/		=	$14,375.00	$14,375.00	$105,625.00
2019		$115,000.00	/	4	=	$28,750.00	$43,125.00	$76,875.00
2020		$115,000.00	/	4	=	$28,750.00	$71,875.00	$48,125.00
2021		$115,000.00	/	4	=	$28,750.00	$100,625.00	$19,375.00
Depreciable cost =120000-5000
Double-Declining-Balance Depreciation Schedule
		Depreciation for the Year
	Asset	Book		DDB		Depreciation	Accumulated	Book
Date	Cost	Value		Rate		Expense	Depreciation	Value
2018	$120,000
2018 (120000*50%*6/12)		$120,000	x		=	$30,000	$30,000	$90,000
2019		$90,000	x	50%	=	$45,000	$75,000	$45,000
2020		$45,000	x	50%	=	$22,500	$97,500	$22,500
2021		$22,500	x	50%	=	$11,250	$108,750	$11,250
DDB Rate= 1/ Estimated Life X 2= 1/4X2= 50%