Question

On January 1, 2020, Carp Corp. purchased a printer designed to print documents for a cost of $2,800. In addition to this purchase price, Carp had to pay $300 cash for installation of the system

The system is expected to last for 10 years, or print 12,000 documents, after which time it will have a residual value of $100.

1. Give Carp’s journal entry to purchase the printer.

2. Calculate Carp’s depreciation expense for 2020, 2021, and 2022, under the straight-line, unit, and double-declining balance methods. Assume that the printer printed 800 documents in 2020, 1,600 documents in 2021, and 1,200 documents in 2022.

3. Using straight-line depreciation, what is Carp’s accumulated depreciation at December 31, 2022? What is the net value of the asset at December 31, 2022?

4. Using unit depreciation, what is Carp’s accumulated depreciation at December 31, 2021? What is the net value of the asset at December 31, 2021?

5. Using double declining balance depreciation, what is Carp’s accumulated depreciation at December 31, 2020? What is the net value of the asset at December 31, 2020?

Answer 1

Date	Accounts and Explanation	Debit	Credit
Jan. 1	Printer ($2,800 + $300)	$3,100	-
	Cash	-	$3,100

Depreciation:

Straight line: = ($3,100 - $100) / 10 = $300
Straight line depreciation remains same for all the years
Year	Depreciation
2020	$300
2021	$300
2022	$300
Units of Production: ($3,100 - $100) / 12,000 = $0.25
Year	Units printed	Cost per unit	Depreciation
2020	800	$0.25	$200
2021	1600	$0.25	$400
2022	1200	$0.25	$300
Double Declining rate = 100 X 2 / 10 = 20%
Year	Balance	Rate	Depreciation
2020	$3,100	20%	$620
2021	$2,480	20%	$496
2022	$1,984	20%	$397

Accumulated Depreciation and Net Book Value:

Method	Year	Accumulated depreciatin	Net book value
Straight line	2022	$900	$2,200
Units of production	2021	$600	$2,500
Double declining	2020	$620	$2,480