Respuesta :
Answer:
1. $11,000 each year
2. $23,000 and $18,400
3. $15,000 and $12,500
Explanation:
The calculation of the depreciation expense for the 2021 and 2022 is shown below:
1. Straight-line method:
= (Purchase value of equipment - estimated residual value) ÷ (estimated service life)
= ($115,000 - $5,000) ÷ (10 years)
= ($110,000) ÷ (10 years)
= $11,000
In this method, the depreciation is same for all the remaining useful life i.e for 2021 also the same depreciation is applied i.e $11,000
2. Double-declining balance method:
First we have to determine the depreciation rate which is
= One ÷ estimated service life
= 1 ÷ 10
= 10%
Now the rate is double So, 20%
In year 1, the original cost is $115,000, so the depreciation is $23,000 after applying the 20% depreciation rate
And, in year 2, the $(115,000 - $23,000) × 20% = $18,400
3. Units-of-production method:
= (Purchase value of equipment - estimated residual value) ÷ (estimated production units)
= ($115,000 - $5,000) ÷ ($220,000 units)
= ($110,000) ÷ (220,000 units)
= $0.5 per units
For 2021, it would be
= Production units in 2021 year × depreciation per unit
= 30,000 units × $0.5
= $15,000
Now for the 2022, it would be
= Production units in 2022 year × depreciation per unit
= 25,000 units × $0.5
= $12,500
Depreciation expenses using Straight line is $11,000
Depreciation expenses using Double-declining balance is $18,400
Depreciation expenses using Units of production is $12,500
Straight-line method of depreciation is regarded as the simplest form of depreciation
- The formulae for this method is {[Purchase value of equipment - Estimated residual value) / Estimated service life}
Given information
Purchase value of equipment = $115,000
Estimated residual value = $5,000
Estimated service life = 10
Deprecation expenses = ($115,000 - $5,000) / 10 years
Deprecation expenses = $110,000 / 10
Deprecation expenses = $11,000
Double-declining balance method is an accelerated depreciation method where asset are depreciated at twice the rate in the straight-line method
Depreciation rate = 1 / Estimated service life
Depreciation rate = 1 / 10
Depreciation rate = 10%
So, the rate is double = 10% * 2 = , 20%
- In year 1, the original cost is $115,000, Depreciation = $23,000 after applying the 20% depreciation rate
in year 2, Depreciation = ($115,000 - $23,000) * 20%
Depreciation = $18,400
Formulae for Units-of-production method is (Purchase value of equipment - estimated residual value) / Estimated production units
Units-of-production method = [$115,000 - $5,000] / $220,000 units
Units-of-production method = $110,000 / 220,000 units
Units-of-production method = $0.5 per units
For 2021, Depreciation = Production units in 2021 year * Depreciation per unit
Depreciation = 30,000 units × $0.5
Depreciation = $15,000
For 2022, Depreciation = Production units in 2022 year * Depreciation per unit
Depreciation = 25,000 units * $0.5
Depreciation = $12,500
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