Depreciation by Three Methods Partial Years Perdue Company p

Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $87 A80. The equipment was expected to have a useful Iife of three years, or 8,100 operating hours, and a residual value of $2,430 The equipment was used fo ,500 hours during Year 1, 2,800 hours in Year 2, 2,400 hours in Year 3, and 1,400 hours in Year 4 Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining- Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole doilar Straight-line method 21,263 X 28,350 28,350 Year Year 2 Year 4 810 X b. Units-of -output method 15,750v 29,400 25,200 14,700 Year 3 Yeer 4 . Double-declining-belance method 43,740 X 29,160 9,720 | Yeer 4 3,240 Previous

Solution

CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR THE YEAR 2017 Purchase Cost of Machine $                87,480.00 Less: Salvage Value $                  2,430.00 Net Value for Depreciation $                85,050.00 Usefule life of the Assets 3 years Depreciation per year = Value for Depreciation / 3 years =                    28,350.00 Total Depreciation in 3 years = ($ 28,350 X 3)=                    85,050.00 Answer =a = total depreciation as per straight Line method= Year 1                    28,350.00 Year 2                    28,350.00 Year 3                    28,350.00 Year 4                                   -   Answer = B) CALCULATION OF THE DEPRECIATION AS PER ACTIVITY METHOD UNITS OF OUTPUT 2017 Purchase Cost of Machine $                87,480.00 Less: Salvage Value $                  2,430.00 Net Value for Depreciation $                85,050.00 Expected to produce units                            8,100 Units Depreciation per unit =                            10.50 Per Unit ($ 85,050.00 / 8100 Units) Depreciation for Year 1 = (1500 units * $ 10.50) $                15,750.00 Depreciation for Year 2 = (2800 units * $ 10.50) $                29,400.00 Depreciation for Year 3 = (2,400 units * $ 10.50) $                25,200.00 Depreciation for Year 4 = (1,400 units * $ 10.50) $                14,700.00 CALCULATION OF THE DEPRECIATION AS PER SUM OF DOUBLE DECLINE METHOD Purchase Cost of Machine $                87,480.00 Useful Life = 3 years Depreciation per year = $                29,160.00 (Purchase price / Useful life) Rate of Depreciation (1/3) 0.3333 or 33.33% (Depreication / Purchase price ) Double decline deprection rate = 33.33% * 2 = 66.6667% For the 9 moths rate of depreciation = 66.6667% X 9/12 = 50% Book Value for the opening of the year 1 $                87,480.00 Depreciation for the year 1 @ 50% $                  43,740.0 Closing balance for the year 1 $                  43,740.0 Opening Balance for the year 2 $                  43,740.0 Depreciation for the year 2 @% = 66.6667% $                      29,160 Closing balance for the year 2                      14,580.0 Opening Balance for the year 3 $                  14,580.0 Depreciation for the year 3 @% = 66.6667% $                        9,720 Closing balance for the year 3                         4,860.0 Opening Balance for the year 4 $                    4,860.0 Depreciation for the year 4 @% = 66.6667% $                        3,240 Closing balance for the year 4                         1,620.0