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Computing Partial Period Depreciation under Multiple Depreciation Methods To demonstrate the computations involved in several methods...

Computing Partial Period Depreciation under Multiple Depreciation Methods

To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.

Cost and residual value Estimated service life
Acquisition cost $62,500 Years 5
Residual value $2,500 Service hours 50,000
Productive output (units) 120,000

Required

Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1, 2020.

a. Straight-line depreciation: Compute the annual depreciation rate and amount for each year.

Depreciation rate: Answer
2020 2021 2022 2023 2024 2025
Answer Answer Answer Answer Answer Answer

b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount for the first partial year assuming 4,500 service hours of actual operation.

Depreciation rate: Answer
2020
Answer

c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount for the first partial year assuming 9,000 units of output.

Depreciation rate: Answer
2020
Answer

d. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.

2020 2021 2022 2023 2024 2025
Answer Answer Answer Answer Answer Answer

e. Double-declining-balance method: Compute the depreciation amount for each year.

2020 2021 2022 2023 2024 2025
Answer Answer Answer Answer Answer Answer

Solutions

Expert Solution

Question - B

>> Depreciation per hour = ( $ 62,500 - $ 2,500 ) / 50,000

>> Depreciation per hour = $ 1.2

>> Depreciation for 2020 year = 4,500 * $ 1.2

>> Depreciation for 2020 year = $ 5,400.

Question - C

>> Depreciation per Unit = ( $ 62,500 - $ 2,500 ) / 120,000

>> Depreciation per Unit = $ 0.5

>> Depreciation for 2020 Year = 9,000 * $ 0.5

>> Depreciation for 2020 year = $ 4,500..

ekkarill92 answered 2 years ago
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