Question

Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $37,530. The equipment was expected to have a useful life of three years, or 4,860 operating hours, and a The estimated value of a fixed asset at the end of its useful life.residual value of $1,080. The equipment was used for 900 hours during Year 1, 1,700 hours in Year 2, 1,500 hours in Year 3, and 760 hours in Year 4.

Required:

Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.straight-line method, (b) A method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset. units-of-output method, and (c) the A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.double-declining-balance method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

b. Units-of-output method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

c. Double-declining-balance method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

Answer 1

As per SLM Method
Year	Original Cost	Beg. Book Value	Depreciation Expense	Accumulated Depreciation	Ending Book Value
1	37,530	37,530.00	9,112.50	9,112.50	28,417.50
2	37,530	28,417.50	9,112.50	18,225.00	19,305.00
3	37,530	19,305.00	9,112.50	27,337.50	10,192.50
4	37,530	10,192.50	9,112.50	36,450.00	1,080.00
SLM=( Original Cost- Salvage Value )/ No. of Year
= (37530-1080)/4=9000

Unit of Production Method
Year	Original Cost	Beg. Book Value	Depreciation Expense	Accumulated Depreciation	Ending Book Value	Working :-( Cal of Depreciation)
1	37,530.00	37,530.00	6,750.00	6,750.00	30,780.00	(37530-1080)/4860*900
2	37,530.00	30,780.00	12,750.00	19,500.00	18,030.00	(37530-1080)/4860*1700
3	37,530.00	18,030.00	11,250.00	30,750.00	6,780.00	(37530-1080)/4860*1500
4	37,530.00	6,780.00	5,700.00	36,450.00	1,080.00	(37530-1080)/4860*760

As per double declinning method
Year	Original Cost	Beg. Book Value	Depreciation Expense	Accumulated Depreciation	Ending Book Value
1	37,530.00	37,530.00	18,765.00	18,765.00	18,765.00
2	37,530.00	18,765.00	9,382.50	28,147.50	9,382.50
3	37,530.00	9,382.50	4,691.25	32,838.75	4,691.25
4	37,530.00	4,691.25	2,345.63	35,184.38	2,345.63
5	37,530.00	2,345.63	1,172.81	36,357.19	1,172.81
Rate of Depreciation :=1/4*2= 50%