This Question 1 pt 6 of 50 4 complete This Test 50 pts possi

This Question: 1 pt 6 of 50 (4 complete) This Test: 50 pts possible EQuestion Help At the beginning of last year, Bratworth Corporation purchased a piece of heavy equipment for $65,000. The equipment has a life of five years or 100,000 hours. The estimated residual value is $5,000. Bremond used the equipment for 23,000 hours last year and 28,000 hours this year. Depreciation expense for year two using double-declining-balance (DDB) and units-of-production (UOP) methods would be as follows: (Carry all rates to two decimal places, Xxx) DDB UOP OA $15,600 $18.200 OB. $14400 $18.200 Oc. $14.400 $16,800 OD. $15,600 $16.800 Click to select your answer 28

Solution

Depreciation for year 2 Using Double Declining Balance [DDB] Method

Depreciation Expense = Beginning Balance x 2 x Straight Line Depreciation Rate

Straight Line Depreciation Rate = 1 / Useful Life = 1 / 5 = 0.20

Depreciation, Year 1 = [$65,000 x 2 x 0.20] = $26,000

Depreciation, Year 2 = [$65,000 – 26,000] x 2 x 0.20 = $15,600

Depreciation for Year 2 Using Units of Production Method [UOP]

Depreciation under Units of Production Method

= [Cost of the Equipment – Residual Value] x [Hours used in Year 2/Estimated total hours]

= [$65,000 – 5,000] x [28,000 Hours / 100,000 Hours]

= $60,000 x 0.28

= $16,800

Hence, The Answer is “D. $15,600, $16,800”