Design Service Co. purchased a new color copier at the beginning of 2016 for $47,000. The copier
Question:
Design Service Co. purchased a new color copier at the beginning of 2016 for $47,000. The copier is expected to have a five-year useful life and a $7,000 salvage value. The expected copy production was estimated at 2,000,000 copies. Actual copy production for the five years was as follows:
2016 ...... 560,000
2017 ...... 490,000
2018 ....... 430,000
2019 ....... 350,000
2020 ...... 210,000
Total ......2,040,000
The copier was sold at the end of 2020 for $7,600.
Required
a. Compute the depreciation expense for each of the five years, using double-declining-balance depreciation.
b. Compute the depreciation expense for each of the five years, using units-of-production depreciation.
c. Calculate the amount of gain or loss from the sale of the asset under each of the depreciation methods.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Step by Step Answer:
a DoubleDeclining Balance CostAccum Depr x 2 x SL Rate Depr Exp Per Year SL Rate 1 5 20 2016 47000 0 ...View the full answer
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
