Computing Partial Period Depreciation under Multiple Depreciation Methods

To demonstrate the computations involved in several methods of depreciating a fixed asset, the following information is provided.

Cost and residual value		Estimated service life
Acquisition cost	$50,000	Years	5
Residual value	$2,000	Service hours	40,000
		Productive output (units)	96,000

Required

Compute the annual depreciation using each of the following methods assuming that the asset was purchased on August 1 of the current year.

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

Carry all decimals in calculations; round finalanswers to the nearest dollar.

Depreciation rate:

Answer

Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Answer	Answer	Answer	Answer	Answer	Answer

b. Units-of-production method using service hours as a measure of input: Compute the depreciation rate and amount for the first partial year assuming 3,600 service hours of actual operation.

Depreciation rate:

Answer

Year 1

Answer

c. Units-of-production method using units produced as a measure of output: Compute the depreciation rate and amount for the first partial year assuming 7,200 units of output.

Depreciation rate:

Answer

Year 1

Answer

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

Carry all decimals in calculations; round finalanswers to the nearest dollar.

Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Answer	Answer	Answer	Answer	Answer	Answer

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

Carry all decimals in calculations; round finalanswers to the nearest dollar.

Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Answer	Answer	Answer	Answer	Answer	Answer