Depreciation by Three Methods; Partial Years Layton Company purchased tool sharpening equipment on October 1 for $19,980.
Question:
Depreciation by Three Methods; Partial Years
Layton Company purchased tool sharpening equipment on October 1 for $19,980. The equipment was expected to have a useful life of three years or 4,320 operating hours, and a residual value of $540. The equipment was used for 800 hours during Year 1, 1,500 hours in Year 2, 1,300 hours in Year 3, and 720 hours in Year 4.
Required:
Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
a. Straight-line method
Year | Amount |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
Year 4 | $ |
b. Units-of-activity method
Year | Amount |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
Year 4 | $ |
c. Double-declining-balance method
Year | Amount |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
Year 4 | $ |
Prior to adjustment at the end of the year, the balance in Trucks is $298,988 and the balance in Accumulated Depreciation—Trucks is $101,200. Details of the subsidiary ledger are as follows:
Estimated | Accumulated Depreciation at | Miles Operated | |||
Truck No. | Cost | Residual Value | Useful Life | Beginning of Year | During Year |
1 | $85,360 | $14,940 | 251,500 miles | — | 20,400 miles |
2 | 51,100 | 6,040 | 300,400 miles | $14,930 | 32,500 miles |
3 | 76,450 | 13,830 | 202,000 miles | 61,330 | 8,100 miles |
4 | 86,078 | 22,520 | 235,400 miles | 24,940 | 22,300 miles |
A. | Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year. Round the rate per mile to two decimal places and credit to accumulated depreciation to the nearest dollar. | |||||||||||||||||||||||
B. | Journalize the entry on Dec. 31 to record depreciation for the year. Refer to the Chart of Accounts for exact wording of account titles. A. Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year. Round the rate per mile to two decimal places and credit to accumulated depreciation to the nearest dollar.
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Financial & Managerial Accounting
ISBN: 978-1337902663
15th edition
Authors: Carl Warren, Jefferson P. Jones, William B. Tayler