Question

Mama'sMama's

Fried Chicken bought equipment on

JanuaryJanuary

22?,

20162016?,

for

$ 18 comma 000$18,000.

The equipment was expected to remain in service for four years and to perform

3 comma 7503,750

fry jobs. At the end of the?equipment's useful? life,

Mama'sMama's

estimates that its residual value will be

$ 3 comma 000.$3,000.

The equipment performed

375375

jobs the first? year,

1 comma 1251,125

the second? year,

1 comma 5001,500

the third? year, and

750750

the fourth year.

Requirements

1.	Prepare a schedule of depreciation? expense, accumulated? depreciation, and book value per year for the equipment under the three depreciation methods. Show your computations. ?Note: Three depreciation schedules must be prepared.
2.	Which method tracks the wear and tear on the equipment most? closely?

Requirement 1. Prepare a schedule of depreciation? expense, accumulated? depreciation, and book value per year for the equipment under the three depreciation methods. Show your computations. ?Note: Three depreciation schedules must be prepared.

Begin by preparing a depreciation schedule using the? straight-line method.

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Depreciation		Depreciation	Accumulated	Book
Date	Cost	Cost		Rate		Expense	Depreciation	Value
1-2-2016	$18,000							$18,000
12-31-2016			/	4 years	=
12-31-2017			/		=
12-31-2018			/		=
12-31-2019			/		=

Answer 1

• All working forms part of the answer
• Requirement 1 asked for Straight Line Depreciation and template for the same has been provided.
• Asset depreciable cost = $18000 - $3000 Salvage Value = $15000
• Answer as required

Straight-Line Depreciation Schedule
		Depreciation for the Year
	Asset	Depreciable		Depreciation		Depreciation	Accumulated	Book
Date	Cost	Cost		Rate		Expense	Depreciation	Value
01-02-2016	$      18,000.00	$ 3,000.00						$ 18,000.00
12-31-2016	$      18,000.00	$ 3,000.00	/	4 years	=	$ 750.00	$     750.00	$ 17,250.00
12-31-2017	$      18,000.00	$ 3,000.00	/	4 years	=	$ 750.00	$ 1,500.00	$ 16,500.00
12-31-2018	$      18,000.00	$ 3,000.00	/	4 years	=	$ 750.00	$ 2,250.00	$ 15,750.00
12-31-2019	$      18,000.00	$ 3,000.00	/	4 years	=	$ 750.00	$ 3,000.00	$ 15,000.00