Question

The details of the January 1, 2020 purchase of property, plant & equipment by Concord Industries is as follows:

		Cost		Residual Value		Useful Life		Depreciation Method
Machinery		$1,466,000		$106,000		1 million units		Activity Method
Building		$647,000		$77,000		30 years		Straight line
Computer		$202,500		$11,000		5 years		Double-Declining-Balance

During 2020 Concord produced 150,000 units using its machinery. Calculate the 2020 depreciation for each of the property, plant & equipment items. (Round depreciation per unit to 2 decimal places, e.g. 7.25 and final answers to 0 decimal places, e.g. 5,125.)

2020 Depreciation Expense
Machinery Equipment		$
Building		$
Computer Equipment		$

Answer 1

1. Machinery Equipment - Activity Method.

>> Depreciation per unit = ( $ 1,466,000 - $ 106,000 ) / 1,000,000

>> Depreciation per unit = $ 1.36.

>> Depreciation for 2020 = 150,000 * $ 1.36

>> Depreciation for 2020 = $ 204,000.

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2. Building - Straight line method.

>> Depreciation per annum = ( $ 647,000 - $ 77,000 ) / 30

>> Depreciation per annum = $ 19,000.

>> Depreciation for 2020 = $ 19,000.

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3. Computer Equipment - Double declining method

>> Depreciation rate = 200 / 5

>> Depreciation rate = 40 %.

>> Depreciation for 2020 = $ 202,500 * 40 %

>> Depreciation for 2020 = $ 81,000.

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