Question

On January 1, 2014, Courier Inc. purchased new equipment that had a total cost (including shipping and installation) of $82,000. The equipment is expected to have a useful life of four years or produce a total of 122,000 units. At the end of its life, the equipment is expected to have a residual value of $4,900. The equipment is expected to produce 25,620 units in 2014; 32,940 units in 2015; 34,160 units in 2016; and 29,280 units in 2017. Courier Inc.'s fiscal year ends on December 31.

In the table below, fill in the missing depreciation expense and accumulated depreciation amounts using the straight-line, double-declining-balance, and units-of-production methods. Do not round your intermediate calculation. When required, round your answers to the nearest dollar.

Cost $82,000	Depreciation Expense			Accumulated Depreciation
Year	Straight-line Method	Double- Declining- Balance Method	Unit-of- Production Method	Straight-line Method	Double- Declining- Balance Method	Unit-of- Production Method
2014	$19,275	$41,000	$16,191	$19,275	$41,000	$16,191
2015	$19,275	$ ?	$20,817	$ ?	$61,500	$37,008
2016	$19,275	$10,250	$ ?	$57,825	$ ?	$58,596
2017	$19,275	$5,350	$18,504	$77,100	$77,100	$77,100

Answer 1

1. Computation of Depreciation for Year 2015 under Double Declining Method:

Depreciation for Year 2015 under Double Declining Method = Accumulated Depreciation at the end of Year 2015 - Accumulated Depreciation at the end of Year 2014

Therefore,Depreciation for Year 2015 under Double Declining Method = $61,500 - $41,000 = $20,500

2. Computation of Depreciation for Year 2016 under Unit-of-Production Method:

Units-of-production Depreciation rate = (Cost of Asset - Residual Value) / Total Units of production
Units-of-production Depreciation rate= ($82,000-$4,900)/122,000 units = $0.6320 per unit

Depreciation Expense = Units of production Depreciation x Units Produced

Therefore, depreciation expense for the Year 2016 = 34,160 units * $0.6320 = $21,588

3. Computation of Accumulated Depreciation for Year 2015 under straight-line Method:

Accumulated Depreciation at the end of Year 2015 = Depreciation for Year 2014 as per straight-line Method + Depreciation for Year 2014 as per straight-line Method

Accumulated Depreciation at the end of Year 2015 = $19,275 + $19,275 = $38,550