In: Accounting
University Car Wash built a deluxe car wash across the street
from campus. The new machines cost $258,000 including installation.
The company estimates that the equipment will have a residual value
of $28,500. University Car Wash also estimates it will use the
machine for six years or about 12,500 total hours. Actual use per
year was as follows:
Year | Hours Used |
1 | 2,700 |
2 | 1,500 |
3 | 1,600 |
4 | 2,400 |
5 | 2,200 |
6 | 2,100 |
1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)
2. Prepare a depreciation schedule for six
years using the double-declining-balance method. (Do not
round your intermediate calculations.)
3. Prepare a depreciation schedule for six years using the
activity-based method. (Round your "Depreciation Rate" to 2
decimal places and use this amount in all subsequent
calculations.)