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Depreciation Methods Clearcopy, a printing company, acquired a new press on January 1, 2019. The press...

Depreciation Methods

Clearcopy, a printing company, acquired a new press on January 1, 2019. The press cost $171,600 and had an expected life of 8 years or 4,500,000 pages and an expected residual value of $15,000. Clearcopy printed 691,900 pages in 2019. Do not round intermediate calculations. If required, round your answers to the nearest whole dollar.

Required:

1. Compute 2019 depreciation expense using the:

2019
a. Straight-line method $
b. Double-declining-balance method $
c. Units-of-production method $

2. What is the book value of the machine at the end of 2019 under each method?

Book Value
a. Straight-line method $
b. Double-declining-balance method $
c. Units-of-production method $

Solutions

Expert Solution

1) 2019
a. Straight-line method $           19,575
b. Double-declining-balance method $           42,900
c. Units-of-production method $           24,078
Working:
a. Depreciation expense under Straight Line method = (Cost-Salvage Value)/Useful Life
= (171600-15000)/8
= $       19,575
b. Straight Line rate = 1/8 = 12.5%
Double decline rate = 2 * 12.5% = 25%
Depreciation expense for 2019 = Beginning of Year Book Value x double declinig depreciation rate
= $       1,71,600 x 25%
= $           42,900
c. Depreciation expense per unit = Depreciable base/Total units of production
= (171600-15000)/4500000
= $ 0.0348 per page
Depreciation expense for 2019 = Number of activity x Depreciation expense per unit
=           6,91,900 x $ 0.0348
= $           24,078
2) Book Value
a. Straight-line method $       1,52,025
b. Double-declining-balance method $       1,28,700
c. Units-of-production method $       1,47,522
Working:
Book Value = Costs - Accumulated depreciation expense
In year 1, Depreciation expense and accumulated depreciation is same.
Costs Accumulated Depreciation Expense Ending Book Value
Straight-line method $       1,71,600 $       19,575 $ 1,52,025
Double-declining-balance method $       1,71,600 $       42,900 $ 1,28,700
Units-of-production method $       1,71,600 $       24,078 $ 1,47,522

ekkarill92 answered 1 year ago
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