Homework Answers
| annual depreciation expense | 2018 | 2019 | |
| a. SL | (cost-scrap value)/no. of years | $2500 | $2500 |
| b. UOP | (cost-scrap value) x units produced in the current year/estimated units over life | $1250 | $3250 |
| c. DDB | 2 x straight-line depreciation percentage x book value | $5400 | $3240 |
a) STRAIGHT LINE DEPRECIATION
| year | annual depreciation expense | accumulated depreciation | book value |
| 01-01-2018 | $13500 | ||
| 12-31-2018 | $2500 | $2500 | $11000 |
| 12-31-2019 | $2500 | $5000 | $8500 |
b) UNIT OF PRODUCTION METHOD
| year | annual depreciation expense | accumulated depreciation | book value |
| 01-01-2018 | $13500 | ||
| 12-31-2018 | $1250 | $1250 | $12250 |
| 12-31-2019 | $3250 | $4500 | $9000 |
C) DOUBLE DECLINING BALANCE
| year | annual depreciation expense | accumulated depreciation | book value |
| 01-01-2018 | $13500 | ||
| 12-31-2018 | $5400 | $5400 | $8100 |
| 12-31-2019 | $3240 | $8640 | $4860 |
| date | accounts and explanation | debit | credit |
| 2020 | cash a/c | 7000 | |
| 1 July | depreciation expense a/c | 972 | |
| equipment a/c | 4860 | ||
| Gain on disposal a/c | 3112 | ||
| (being equipment sold at a gain) | |||
Calculation of depreciation for 6 months (upto 1 july 2020) = $4860 x 40% x 6/12 = $972
gain on sale = $7000 - ($4860 - $972) = $3112
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