Consider the follo Requirements Click the i Read the 1 For e

Consider the follo Requirements (Click the i Read the 1. For each depreciation method, prepare a depreciation schedule showing asset cost, Requirement 1 depreciation, and decimal places. depreciation expense, accumulated depreciation, and asset book value for each year of the asset\'s life. For the units-of-production method, round depreciation per unit to three decimal places. accumulated r unit to three 2. Chyler Enterprises, Inc., prepares financial statements using the depreciation method that reports the highest income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years Consider the first year Chyler Enterprises, Inc., uses the equipment. Identify the depreciation methods that meet Chyler Enterprises\' objectives, assuming the income tax authorities permit the use of any method Before completing One year 3. Show how Chyler Enterprises, Inc., would report equipment on the December 31, 2016 balance sheet for each depreciation method Complete the Stra entering the amou hedule by Done On January 1, 2016, Chyler Enterprises, Inc., paid $235,400 for equipment used in manufacturing automotive supplies In addition to the basic purchase price, the company paid $600 transportation charges, $100 insurance for the equipment while in transit, $11,900 sales tax, and $2,000 for a special platform on which to place the equipment in the plant. Chyler Enterprises, Inc., management estimates that the equipment will remain in service for five years and have a residual value of $25,000. The equipment will produce 60,000 units the first year, with annual production decreasing by 10,000 units during each of the next four years (i.e., 50,000 units in year 2; 40,000 units in year 3; and so on for a total of 200,000 units). In trying to decide which depreciation method to use, Chyler Enterprises, Inc., requested a depreciation schedule for each of the three depreciation methods (straight-line, units-of-production, and double-declining balance) Befo per u Print Done Dep cos Complete the Units-of-Production Depreciation Schedule. Begin by filling out the schedule through 2017, and then complete the schedule by entering the amounts through 2020. (Enter depreciation per unit to three decimal places.) Units-of-Production Depreciation Schedule Depreciation Number of Depreciation Accumulated Asset Asset Cost Per Unit Units Expense Depreciation Book Value January 1, 2016 December 31, 2016 December 31, 2017 December 31, 2018 Choose from any list or enter any number in the input fields and then continue to the next question

Solution

Answer

Total Cost of the Equipment = Purchase price + Transportation+ Insurance + Sales Tax + Special platform cost

= 235,400 + 600 + 100 + 11,900 + 2,000

Total Cost of the Truck = $250,000

Salvage Value = $25,000

Useful Life = 5 Years

Straight Line Method

Depreciation Per year = (Cost – Salvage Value) / Useful Life

= (250,000 - 25,000) / 5

= $45,000 per year

Depreciable value = Cost – Salvage Value

= 225,000 (250,000 - 25000)

Depreciation Rate = 1 / Useful Life

1 / 5

Depreciation Rate = 20%

Depreciation = Depreciation rate * Cost

Depreciation for the Year

Date

Asset Cost

Depreciable Cost

Depreciation Rate

Depreciation Expense

Accumulated Depreciation

Book Value

1/1/2016

250,000

             250,000

12/31/2016

            225,000

20%

                 45,000

             45,000

             205,000

12/31/2017

            225,000

20%

                 45,000

             90,000

             160,000

12/31/2018

            225,000

20%

                 45,000

           135,000

             115,000

12/31/2019

            225,000

20%

                 45,000

           180,000

                70,000

12/31/2020

            225,000

20%

                 45,000

           225,000

                25,000

Units of Production Method

Depreciable value = Cost – Salvage Value

= 225,000 (250,000 - 25000)

Total Units = 200,000

Depreciation per unit = $225,000 / 200,000 Units

Depreciation per unit = $1.125 Per Unit

Depreciation = (Units produced in that year / Total Units) * Depreciable Value

Depreciation for the Year

Date

Asset Cost

Depreciable Cost

Units

Depreciation Rate

Depreciation Expense

Accumulated Depreciation

Book Value

1/1/2016

250,000

250,000

12/31/2016

            225,000

                60,000

60,000/200,000

             67,500

                67,500

        182,500

12/31/2017

            225,000

                50,000

50,000/200,000

             56,250

             123,750

        126,250

12/31/2018

            225,000

                40,000

40,000/200,000

             45,000

             168,750

           81,250

12/31/2019

            225,000

                30,000

30,000/200,000

             33,750

             202,500

           47,500

12/31/2020

            225,000

              20,000

20,000/200,000

             22,500

             225,000

           25,000

Total

             200,000

Double Declining Balance

Depreciation rate = 2 * Straight line depreciation rate

= 2 * 20%

Depreciation rate = 40%

Depreciation = Book Value * Depreciation Rate

Depreciation for the Year

Date

Asset Cost

Depreciable Cost

Book Value

Depreciation Rate

Depreciation Expense

Accumulated Depreciation

1/1/2016

250,000

        250,000

12/31/2016

               250,000

        150,000

40%

           100,000

            100,000

12/31/2017

          90,000

40%

             60,000

            160,000

12/31/2018

          54,000

40%

             36,000

            196,000

12/31/2019

          32,400

40%

             21,600

            217,600

12/31/2020

          19,440

40%

             12,960

            230,560

Requirement 2

There are 4 Blanks,

Requirement 3

31-Dec-16

SL

UOP

DDB

Equipment

250,000

250,000

250,000

Depreciation

45000

67,500

100,000

Net

205,000

182,500

150,000

		Depreciation for the Year
Date	Asset Cost	Depreciable Cost	Depreciation Rate	Depreciation Expense	Accumulated Depreciation	Book Value
1/1/2016	250,000					250,000
12/31/2016		225,000	20%	45,000	45,000	205,000
12/31/2017		225,000	20%	45,000	90,000	160,000
12/31/2018		225,000	20%	45,000	135,000	115,000
12/31/2019		225,000	20%	45,000	180,000	70,000
12/31/2020		225,000	20%	45,000	225,000	25,000