In: Accounting
depreciation expense
Stacey Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2021, an asset account for the company showed the following balances: Manufacturing equipment $ 67,800 Accumulated depreciation through 2020 45,000 In early January 2021, the following expenditures were incurred for repairs and maintenance: Routine maintenance and repairs on the equipment $ 950 Major overhaul of the equipment 9,700 The equipment is being depreciated on a straight-line basis over an estimated life of 14 years, with a $4,800 estimated residual value. The company’s fiscal year ends on December 31. Required: 1. Calculate the depreciation expense for the manufacturing equipment for 2020.
Depreciation expenses for 2020 is 4,500. For 2021 is 6,925
Computation of WDV opening at 2021- | |
Opening balance | 67,800 |
Less: accumulated depreciation | (45,000) |
WDV | 22,800 |
Computation of remaining life and depreciation expenses for 2020- | |
Opening cost | 67,800 |
Less: residual value | (4,800) |
Depreciable value | 63,000 |
Life - years | 14 |
Depreciation per year until 2020 | 4,500 |
Total accumulated depreciation | 45,000 |
Life spent- yrs | 10 |
Remaining life- years | 4 |
Computation of depreciation expenses for 2021- | |
WDV at beginning of 2021 | 22,800 |
Add: major overhaul | 9,700 |
Less: residual value | (4,800) |
Depreciable value remaining | 27,700 |
Remaining life- years | 4 |
Depreciation expenses for 2021 | 6,925 |