Question

Prepare a schedule of depreciation​ expense, accumulated​ depreciation, and book value per year for the equipment under the three depreciation​ methods: straight-line,​ units-of-production, and​ double-declining-balance. Show your computations. ​Note: Three depreciation schedules must be prepared.

2.

Which method tracks the wear and tear on the equipment most​ closely?

Mama'sMama's Fried Chicken bought equipment on JanuaryJanuary 22, 20182018, for $ 18 comma 000$18,000. The equipment was expected to remain in service for four years and to operate for 3 comma 0003,000 hours. 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 operated for 300300 hours the first year, 900900 hours the second year, 1 comma 2001,200 hours the third year, and 600600 hours the fourth year. Read the requirements LOADING... . Requirement 1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, anddouble-declining-balance. 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 Useful Depreciation Accumulated Book Date Cost Cost Life Expense Depreciation Value 1-2-2018 12-31-2018 / = 12-31-2019 / = 12-31-2020 / = 12-31-2021 / = Before calculating the units-of-production depreciation schedule, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation expense per unit. ( - ) / = Depreciation per unit ( - ) / = Prepare a depreciation schedule using the units-of-production method. Units-of-Production Depreciation Schedule Depreciation for the Year Asset Depreciation Number of Depreciation Accumulated Book Date Cost Per Unit Units Expense Depreciation Value 1-2-2018 12-31-2018 x = 12-31-2019 x = 12-31-2020 x = 12-31-2021 x = Prepare a depreciation schedule using the double-declining-balance (DDB) method. (Enter a "0" for any items with a zero value.) Double-Declining-Balance Depreciation Schedule Depreciation for the Year Asset Book DDB Depreciation Accumulated Book Date Cost Value Rate Expense Depreciation Value 1-2-2018 12-31-2018 x = 12-31-2019 x = 12-31-2020 = 12-31-2021 = Requirement 2. Which method tracks the wear and tear on the equipment most closely? The ▼ double-declining-balance straight-line units-of-production method tracks wear and tear most closely.

Answer 1

Calculation of residual Value= 18,000-3,000=15,000

Straight-Line Depreciation Schedule
		Depreciation for the year
Date	Asset Cost	Depreciable cost		Depreciation rate		Depreciation expense		Accumulated Depreciation	Book Value
22-01-2018	$ 18,000.00
31-12-2016		$            15,000.00	/	4 Years		$                         3,750.00		$                                   3,750.00	$ 14,250.00
31-12-2017		$            15,000.00	/	4 Years		$                         3,750.00		$                                   7,500.00	$ 10,500.00
31-12-2018		$            15,000.00	/	4 Years		$                         3,750.00		$                                 11,250.00	$    6,750.00
31-12-2019		$            15,000.00	/	4 Years		$                         3,750.00		$                                 15,000.00	$    3,000.00
Units-of-Production Depreciation Schedule
Date	Asset Cost	Depreciable Per unit		Number of units		Depreciation expense		Accumulated Depreciation	Book Value
22-01-2018	$ 18,000.00
31-12-2016		5	x	300		$                         1,500.00		$                                   1,500.00	$ 16,500.00
31-12-2017		5	x	900		$                         4,500.00		$                                   6,000.00	$ 12,000.00
31-12-2018		5	x	1200		$                         6,000.00		$                                 12,000.00	$    6,000.00
31-12-2019		5	x	600		$                         3,000.00		$                                 15,000.00	$    3,000.00
Caculation of Depreciable Per unit= 15000/3000= 5 per unit
Double-Declining-Balance Depreciation Schedule
Date	Asset Cost	Bool value		DDB RATE		Depreciation expense		Accumulated Depreciation	Book Value
22-01-2018	$ 18,000.00
31-12-2016		$            18,000.00	x	2*1/4		$                         9,000.00		$                                   9,000.00	$    9,000.00
31-12-2017		$              9,000.00	x	2*1/4		$                         4,500.00		$                                 13,500.00	$    4,500.00
31-12-2018						$                         1,500.00		$                                 15,000.00	$    3,000.00
31-12-2019								$                                 15,000.00	$    3,000.00

2) units-of-production method tracks the wear and tear on the equipment most closely