Use the information on the Given Data worksheet to prepare three depreciation schedules using the following methods: straight-line, double-declining balance, and activity-based.

Auburn Car Wash

Straight Line

Calculation

End of Year Amounts

Depreciable

X

Depreciation

=

Depreciation

Accumulated

Book

Year

Cost

Rate

Expense

Depreciation

Value

1

Class hour:

If you hover your mouse over a cell with a red flag you will see the comment

2

3

4

5

Total

Auburn Car Wash

Double-Declining-Balance

Calculation

End of Year Amounts

Beginning

X

Depreciation

=

Depreciation

Accumulated

Book

Year

Book Value

Rate

Expense

Depreciation

Value

1

If you hover your mouse over a cell with a red flag you will see the comment

2

3

4

5

Note: for year 5 you must make the year end book value equal to the Residual Value

Total

Therefore you will need to take the beginning book value less the Residual Value

Auburn Car Wash

Activity-Based

When you have completed all three schedules answer the following question.

What do you observe about the Book Value at the end of the 5th year for all three methods?

Calculation

End of Year Amounts

Hours

X

Depreciation

=

Depreciation

Accumulated

Book

Type answer here------->

Year

Used

Rate

Expense

Depreciation

Value

1

2

3

4

5

Total

Cost of new car wash machines $800,000 Estimated residual value $50,000 Machine life in years 5 Machine life in hours 10,000

Actual use per year: Hours Year Used 1 2,000 2 1,800 3 2,200 4 2,100 5 1,900