Question

Exercise 7-48 (Algorithmic) Depreciation Methods Berkshire Corporation purchased a copying machine for $9,800 on January 1, 2019. The machine's residual value was $1,175 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies in the first year and 462,000 in the second year. Required: 1. Compute depreciation expense for 2019 and 2020 using the: a. Straight-line method. Depreciation expense: $fill in the blank 1 per year b. Double-declining-balance method. Depreciation Expense 2019 $fill in the blank 2 2020 $fill in the blank 3 c. Units-of-production method. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Depreciation Expense 2019 $fill in the blank 4 2020 $fill in the blank 5 2. For each depreciation method, what is the book value of the machine at the end of 2019? At the end of 2020? If required, round your answers to the nearest whole dollar. 2019 2020 a. Straight-line method $fill in the blank 6 $fill in the blank 7 b. Double-declining-balance method $fill in the blank 8 $fill in the blank 9 c. Units-of-production method $fill in the blank

10 $fill in the blank 11

Answer 1

Berkshire Corporation
Straight Line	Amount $	Note
Cost of machine	9,800.00	E
Less: Residual Value	1,175.00
Depreciable Value	8,625.00	A
Estimated life	5.00	B
Annual Depreciation	1,725.00	C=A/B
Depreciation expense for 2019	1,725.00	See C
Depreciation expense for 2020	1,725.00	See C
Book value at end of 2019	8,075.00	D=E-C
Book value at end of 2020	6,350.00	F=D-C
Units of production	Amount $
Cost of machine	9,800.00
Less: Residual Value	1,175.00
Depreciable Value	8,625.00	See A
Total useful life (copies)	2,000,000.00	G
Depreciation per copy	0.00431250	H=A/G
Number of copies in 2019	480,000.00	I
Depreciation for 2019	2,070.00	J=H*I
Number of copies in 2020	462,000.00	K
Depreciation for 2020	1,992.00	L=H*K
Book value at end of 2019	7,730.00	M=E-J
Book value at end of 2020	5,738.00	N=M-L
Double declining method	Amount $
Cost of machine	9,800.00	Q
Estimated life	5.00	See B
Annual depreciation	1,960.00	R=Q/B
Depreciation rate	20.00%	S=R/Q
Double Depreciation %	40.00%	T=S*2
Depreciation for 2019	3,920.00	U=Q*T
Book value at the end of 2019	5,880.00	X=Q-W
Depreciation for 2020	2,352.00	Y=X*T
Book value at the end of 2020	3,528.00	Z=X-Y