Question

Cheetah Copy purchased a new copy machine. The new machine cost $114,000 including installation. The company estimates the equipment will have a residual value of $28,500. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 1 2,000 2 2,000 3 2,000 4 3,200 3. Prepare a depreciation schedule for four years using the activity-based method. (Round your "Depreciation Rate" to 3 decimal places and use this amount in all subsequent calculations.) Anything helps!

Answer 1

• Working

A	Cost	$          114,000.00
B	Residual Value	$            28,500.00
C=A - B	Depreciable base	$            85,500.00
D	Usage	8,000 hours
E = C/D	Depreciation per …..	$                  10.688 per hour

• Requirement: Activity Based Method

Year	Book Value	Usage	X Activity rate of $ 10.688 per hour	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$           114,000.00	2,000	X $ 10.688	$         21,376.00	$             92,624.00	$        21,376.00
2	$              92,624.00	2,000	X $ 10.688	$         21,376.00	$             71,248.00	$        42,752.00
3	$              71,248.00	2,000	X $ 10.688	$         21,376.00	$             49,872.00	$        64,128.00
4	$              49,872.00	2,000 [8000 – 2000 – 2000 – 2000]	X $ 10.688	$         21,376.00	$             28,496.00	$        85,504.00