Question

In: Accounting

Exact Photo Service purchased a new color printer at the beginning of Year 1 for $39,700....

Exact Photo Service purchased a new color printer at the beginning of Year 1 for $39,700. The printer is expected to have a four-year useful life and a $3,700 salvage value. The expected print production is estimated at $1,770,500 pages. Actual print production for the four years was as follows:

Year 1 550,700
Year 2 477,500
Year 3 375,300
Year 4 390,000
Total 1,793,500


The printer was sold at the end of Year 4 for $4,100.

Required
a.
Compute the depreciation expense for each of the four years, using double-declining-balance depreciation.

epreciation Expense

Year 1

Year 2

Year 3

Year 4

Total accumulated depreciation$0

Solutions

Expert Solution

Answer to Requirement 1:

Double Declining Depreciation Rate = 2 * Straight Line Depreciation Rate
Straight Line Depreciation Rate = 1 / Useful Life
Straight Line Depreciation Rate = 1/ 4 = 25%

Double Declining Depreciation Rate = 2 * 25% = 50%

Depreciation for Year 1 = $39,700 * 50%
Depreciation for Year 1 = $19,850

Book Value at the end of Year 1 = $39,700 - $19,850
Book Value at the end of Year 1 = $19,850

Depreciation for Year 2 = $19,850 * 50%
Depreciation for Year 2 = $9,925

Book Value at the end of Year 2 = $19,850 - $9,925
Book Value at the end of Year 2 = $9,925

Depreciation for Year 3 = $9,925 * 50%
Depreciation for Year 3 = $4,963

Book Value at the end of Year 3 = $9,925 - $4,963
Book Value at the end of Year 3 = $4,962

Depreciation for Year 4 = $4,962 - $3,700
Depreciation for Year 4 = $1,262

Total Accumulated Depreciation = $19,850 + $9,925 + $4,963 + $1,262
Total Accumulated Depreciation = $36,000


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