Breyer Company purchased packaing equipmenton january 3, 2010, for $101,250. The
ID: 2369148 • Letter: B
Question
Breyer Company purchased packaing equipmenton january 3, 2010, for $101,250. The equipment was expected to have a useful life of three years, or 25,000 operating hours, and a residual value of $ 7,500. The equipment was used for 9,500 hours during 2010, 8,400 hours in 2011, ad 7,100 hours in 2012.
Instructions
1. Determine the amount of Depreciation expense for years ended Dec. 31,2010, 2011, and 2012, by (a) the straight-line method, (b) the units-of-production method, and (c) the double-declining-balance method. Als determine the total depreciation expensefor three years y each method. The following columnar headings are suggested for recording he depreciation expense amounts.
Explanation / Answer
Rate me with 5 star.
A. the straight line method
(101,250-7,500)/ 3 = 31250 depreciation per year
2010
31250x 6/12= 15625depreciation expense
2011
31250
2012
31250x 6/12 = 15,625
B. The units of production method
(101,250-7,500)/ 25000= 3.75 depreciation per hour
2010
9500 x3.75= 35625
2011
8400 x3.75= 31500
2012
7100 x3.75= 26625
C the double declining balance method
With the double declining balance method, depreciation is based on the current book value of the asset for each period of deprecation, andresidual valueis ignored. However, the book value of the asset is not allowed to drop below the residual value.
Straight-Line depreciationpercentage is 100% / 3 = 33 1/3%
So the double-declining rate would be 66 2/3%
2010
101,250x 66 2/3% x 6/12
2011
101,250x 66 2/3% x 1
i have some doubts in this method, so check it.
2012
Zero depreciation for 2011