Cullumber Company purchased equipment on account on September 3, 2019, at an invoice price of $182,000. On
Question:
Cullumber Company purchased equipment on account on September 3, 2019, at an invoice price of $182,000. On September 4, 2019, it paid $3,900 for delivery of the equipment. A one-year, $1,905 insurance policy on the equipment was purchased on September 6, 2019. On September 20, 2019, Cullumber paid $4,100 for the installation and testing of the equipment. The equipment was ready for use on October 1, 2019.
Cullumber estimates that the equipment's useful life will be four years, with a residual value of $7,000. It also estimates that, in terms of activity, the equipment's useful life will be 73,200 units. Cullumber has a September 30 fiscal year-end. Assume that actual usage is as follows:
# of Units | Year Ended September 30 | |
15,420 | 2020 | |
23,720 | 2021 | |
20,020 | 2022 | |
14,940 | 2023 |
Determine the cost of the equipment.
Cost of equipment | $ |
Prepare depreciation schedules for the life of the asset under the following depreciation methods:
1. | straight-line | |
2. | double diminishing-balance | |
3. | units-of-production |
1. STRAIGHT-LINE DEPRECIATION
End of Year | |||||||||
Year | Depreciable Amount | × | Depr. Rate | = | Depr. Expense | Accum. Depr. | Carrying Amount | ||
2020 | $ | % | $ | $ | $ | ||||
2021 | % | ||||||||
2022 | % | ||||||||
2023 | % |
2. DOUBLE DIMINISHING-BALANCE DEPRECIATION
End of Year | ||||||||||
Year | Carrying Amount Beginning Of Year | × | Depr. Rate | = | Depr. Expense | Accum. Depr. | Carrying Amount | |||
2020 | $ | % | $ | $ | $ | |||||
2021 | % | |||||||||
2022 | % | |||||||||
2023 | % |
3. UNITS-OF-PRODUCTION
End of Year | |||||||||
Year | Units of Production | × | Depr. Amt/Unit | = | Depr. Expense | Accum. Depr. | Carrying Amount | ||
2020 | $ | $ | $ | $ | |||||
2021 | |||||||||
2022 | |||||||||
2023 |
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak