Asked by Mariia Dublevska on May 23, 2024
Verified
Machinery is purchased on July 1 of the current fiscal year for $240,000. It is expected to have a useful life of 4 years, or 25,000 operating hours, and a residual value of $15,000. Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods:
(a)straight-line
(b)double-declining-balance
(c)units-of-output (used for 1,600 hours during the current year)
Double-Declining-Balance
An accelerated method of depreciation which doubles the usual rate of depreciation of assets, allowing for faster write-offs.
Units-Of-Output
A depreciation method that allocates the cost of an asset over its useful life based on the units it produces, reflecting the asset's wear and tear more accurately.
Straight-Line
A method of calculating depreciation or amortization by evenly distributing an asset's cost over its useful life.
- Procure knowledge regarding the fundamental aspects of asset depreciation and the factors that have an impact on it.
- Estimate depreciation employing the straight-line model and comprehend its effect on the accounting statements.
- Execute the double-declining-balance method for calculating the depreciation of assets and understand its implications for valuing assets.
Verified Answer
(b)$60,000 ($240,000 × 0.50 × 6/12)(c)$14,400 [($240,000 - $15,000) ÷ 25,000 hours × 1,600 hours]
Learning Objectives
- Procure knowledge regarding the fundamental aspects of asset depreciation and the factors that have an impact on it.
- Estimate depreciation employing the straight-line model and comprehend its effect on the accounting statements.
- Execute the double-declining-balance method for calculating the depreciation of assets and understand its implications for valuing assets.
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