Computing Depreciation Using Various Depreciation Methods

To demonstrate the computations involved in several methods of depreciating a fixed asset, the following data are used for equipment purchased on January 1, 2020.

Cost and residual value		Estimated service life:
Acquisition cost	$25,000	Years	5
Residual value	$1,000	Service hours	20,000
		Productive output (units)	48,000

Required

Compute annual depreciation using each of the following methods.

a. Straight-line depreciation: Compute the depreciation rate and amount for each year.

Depreciation Rate

Answer

	2020	2021	2022	2023	2024
Depreciation Expense	Answer	Answer	Answer	Answer	Answer

b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount of depreciation expense for the first year assuming 4,400 service hours of actual operation.

Depreciation Rate

Answer

	2020
Depreciation Expense	Answer

c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount of depreciation expense for the first year assuming 8,000 units of output.

Depreciation Rate

Answer

	2020
Depreciation Expense	Answer

d. Sum-of-the-years’-digits method: Compute the depreciation amount for each year.

2020	2021	2022	2023	2024
Answer	Answer	Answer	Answer	Answer

e. Double-declining-balance method: Compute the depreciation amount for each year.

2020	2021	2022	2023	2024
Answer	Answer	Answer	Answer	Answer