West Coast Tours runs boat tours along the west coast of Bri

West Coast Tours runs boat tours along the west coast of British Columbia. On March 5, 2017, it purchased, with cash, a cruising boat for $894,000, having a useful life of 10 years or 16,725 hours with a residual value of $225,000. The company’s year-end is December 31.

Required:
Calculate depreciation expense for the fiscal years 2017, 2018, and 2019 by completing a schedule. (Note: Depreciation is calculated to the nearest month. Assume actual hours of service were: 2017, 830; 2018, 1,890; 2019, 1,645.)

	Depreciation Method Year Straight-Line Double-Declining Balance Units-of-Production 2017 2018 2019

Solution

Year Straight Double Units of line declining production 2017 55,750 149,000 33200 2018 66,900 149,000 75600 2019 66,900 119,200 65800 Straight line = (894000-225000)/10 66900 for first year dep will be for march to december 66900/12*10= 55750 Double Declining method 1/10*2= 0.2 or 20% 2017 894000*20%= 178800 *12/10= 149000 2018 (894,000-149,000)*20%= 149000 2019 (894000-149000*2)*20%= 119200 units of production depreciation rate = ( 894000-225000)/16725 40