Question

Estimated service life					8 years
					100,000 hours
					900,000 units of output
Estimated residual value					P 80,000
The company used the machine for 5,000 hours and 6,000 hours during 2019 and 2020, respectively.
The company also produced 45,000 and 64,000 units in both years, respectively.
1. Using the depreciation methods below, how much is the depreciation charge in 2019 and 2020, and what is the carrying amount of the asset at the end of 2020?
a)	Straight line			e)	Double declining balance
b)	Hours worked			f)	150% declining balance
c)	Units of output
d)	SYD

Answer 1

Straight line method
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	67,500.00		67,500.00	732,500.00
	2020		90,000.00		157,500.00	642,500.00
		*	=((800000-80000)/8)*9/12
Hours worked
Dep'n rate per hour			7.2	= (800000-80000)/100000
			Dep'n Exp		Acc. Dep'n	CV
	2019		36,000.00		36,000.00	764,000.00
	2020		43,200.00		79,200.00	720,800.00
Units of Output
Dep'n rate per unit			0.8	= (800000-80000)/900000
			Dep'n Exp		Acc. Dep'n	CV
	2019		36,000.00		36,000.00	764,000.00
	2020		51,200.00		87,200.00	712,800.00
SYD Method
SYD		36	= (8*(8+1)) / 2
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	120,000.00		120,000.00	680,000.00
	2020	**	145,000.00		265,000.00	535,000.00
		*	=((800000-80000) * (8/36)) *9/12
		**	=(720000)*(7.25/36)
Double declining balance Method
Rate		0.25	= 2/8
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	150,000.00		150,000.00	650,000.00
	2020	**	162,500.00		312,500.00	487,500.00
		*	=(.25*(800000-0))*9/12
		**	=.25*(800000-150000)		= this is the shortcut
		**	or
			=((.25*(800000-0))*3/12) + ((.25*(800000-200000))*9/12)					= this is how you check
150% Declining balance Method
Rate		0.1875	=1.5/8
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	112,500.00		112,500.00	687,500.00
	2020	**	128,906.25		241,406.25	558,593.75
		*	=(0.1875*(800000-0))*9/12
		**	=(0.1875*(800000-112500)
		**	or
			=((.1875*(800000-0))*3/12) + ((.1875*(800000-150000))*9/12)					= this is how you check

Straight line method
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	67,500.00		67,500.00	732,500.00
	2020		90,000.00		157,500.00	642,500.00
		*	=((800000-80000)/8)*9/12
Hours worked
Dep'n rate per hour			7.2	= (800000-80000)/100000
			Dep'n Exp		Acc. Dep'n	CV
	2019		36,000.00		36,000.00	764,000.00
	2020		43,200.00		79,200.00	720,800.00
Units of Output
Dep'n rate per unit			0.8	= (800000-80000)/900000
			Dep'n Exp		Acc. Dep'n	CV
	2019		36,000.00		36,000.00	764,000.00
	2020		51,200.00		87,200.00	712,800.00
SYD Method
SYD		36	= (8*(8+1)) / 2
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	120,000.00		120,000.00	680,000.00
	2020	**	145,000.00		265,000.00	535,000.00
		*	=((800000-80000) * (8/36)) *9/12
		**	=(720000)*(7.25/36)
Double declining balance Method
Rate		0.25	= 2/8
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	150,000.00		150,000.00	650,000.00
	2020	**	162,500.00		312,500.00	487,500.00
		*	=(.25*(800000-0))*9/12
		**	=.25*(800000-150000)		= this is the shortcut
		**	or
			=((.25*(800000-0))*3/12) + ((.25*(800000-200000))*9/12)
150% Declining balance Method
Rate		0.1875	=1.5/8
			Dep'n Exp		Acc. Dep'n	CV
	2019	*	112,500.00		112,500.00	687,500.00
	2020	**	128,906.25		241,406.25	558,593.75
		*	=(0.1875*(800000-0))*9/12
		**	=(0.1875*(800000-112500)
		**	or
			=((.1875*(800000-0))*3/12) + ((.1875*(800000-150000))*9/12)