Depreciation Methods Clearcopy a printing company acquired a

Depreciation Methods

Clearcopy, a printing company, acquired a new press on January 1, 2019. The press cost $171,600 and had an expected life of 8 years or 4,500,000 pages and an expected residual value of $15,000. Clearcopy printed 691,900 pages in 2019. Do not round intermediate calculations. If required, round your answers to the nearest whole dollar.

Required:

1. Compute 2019 depreciation expense using the:

2. What is the book value of the machine at the end of 2019 under each method?

		2019
a.	Straight-line method	$
b.	Double-declining-balance method	$
c.	Units-of-production method	$

Solution

1) 2019 a. Straight-line method $           19,575 b. Double-declining-balance method $           42,900 c. Units-of-production method $           24,078 Working: a. Depreciation expense under Straight Line method = (Cost-Salvage Value)/Useful Life = (171600-15000)/8 = $       19,575 b. Straight Line rate = 1/8 = 12.5% Double decline rate = 2 * 12.5% = 25% Depreciation expense for 2019 = Beginning of Year Book Value x double declinig depreciation rate = $       1,71,600 x 25% = $           42,900 c. Depreciation expense per unit = Depreciable base/Total units of production = (171600-15000)/4500000 = $ 0.0348 per page Depreciation expense for 2019 = Number of activity x Depreciation expense per unit =           6,91,900 x $ 0.0348 = $           24,078 2) Book Value a. Straight-line method $       1,52,025 b. Double-declining-balance method $       1,28,700 c. Units-of-production method $       1,47,522 Working: Book Value = Costs - Accumulated depreciation expense In year 1, Depreciation expense and accumulated depreciation is same. Costs Accumulated Depreciation Expense Ending Book Value Straight-line method $       1,71,600 $       19,575 $ 1,52,025 Double-declining-balance method $       1,71,600 $       42,900 $ 1,28,700 Units-of-production method $       1,71,600 $       24,078 $ 1,47,522