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depreciation expense Stacey Company operates a small manufacturing facility as a supplement to its regular service...

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.

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Expert Solution

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

ekkarill92 answered 4 months ago
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