Question

In: Accounting

Calculate the depreciation for the following scenarios.  Bought a piece of equipment costing $30,000, with a salvage...

Calculate the depreciation for the following scenarios.  Bought a piece of equipment costing $30,000, with a salvage value of $10,000.

a) Figure the SL depreciation for year one and year two.  Assuming a 10 year useful life.

b) Figure the units of production (activity) depreciation.  Assuming that total units will be 100,000.

                    Year 1 – 20,000 units

                    Year 2 -  30,000 units

c)Figure the double declining balance depreciation for year one and year two.  Assuming a 4 year life.

d) Figure the SL depreciation; assuming a 10 year life; if the equipment was purchased on July 1st.

e) Prepare the Journal Entry for a (SL Depreciation)

Solutions

Expert Solution

Rreq a:
Cost of Equipment 30000
Less: Salvage value 10000
Depreciable cost 20000
Divide: Life 10
Annual depreciation 2000
Depreciation expense
Year-1 2000
Year-2 2000
Req b:
Units of Production:
Cost of Equipment 30000
Less: Salvage value 10000
Depreciable cost 20000
Divide: Life 100000
Depreciation per unit 0.2
Units Depreciation expense
Year-1 20000 4000 (20000*0.2)
Year-2 30000 6000 (30000*0.2)
Req c:
DDB:
Rate of depreciation under DDB (100/4*2): 50%
Cost of assets 30000
Deprecition in Year-1 15000
Book value at end of Year-1 15000
Depreciation in Year-2 7500
Depreciation expense
Year-1 15000
Year-2 7500
Req d:
Cost of Equipment 30000
Less: Salvage value 10000
Depreciable cost 20000
Divide: Life 10
Annual depreciation 2000
Depreciation expense
Year-1 1000 (2000*6/12) for six months
Year-2 2000
Req e:
Journal entry for SLM depreciation:
Depreciation expense Dr. 1000
     Accumulated depreciation 1000

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