Monte’s Coffee Company purchased packaging equipment on January 5, 2014, for $10
ID: 2427479 • Letter: M
Question
Monte’s Coffee Company purchased packaging equipment on January 5, 2014, for $105,200. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $7,200. The equipment was used for 8,520 hours during 2014, 6,940 hours in 2015, and 4,540 hours in 2016.
Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, and 2016 by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
Explanation / Answer
Answer:
SLM method=(original cost-Residual value)/Estimated life
Units Of production method=(original cost-Residual value)*usage hours/Total Hours
Double declining method=2*SL rate*Beg NBV
Date Straight Line Method Units of Output Method Double Declining Balance Method 2014 32667 41748 70126 2015 32667 34006 23380 2016 32667 22246 7795 Total 98001 98000 101301