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ACTG1054 Depreciation Homework

The document presents a detailed analysis of depreciation expenses using three methods: straight line, units of activity, and double declining balance. Each method calculates the depreciation expense over four years, resulting in a total of $285,000 for all methods. The calculations include formulas and specific rates used for each method.

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franeslijeronimo
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5 views2 pages

ACTG1054 Depreciation Homework

The document presents a detailed analysis of depreciation expenses using three methods: straight line, units of activity, and double declining balance. Each method calculates the depreciation expense over four years, resulting in a total of $285,000 for all methods. The calculations include formulas and specific rates used for each method.

Uploaded by

franeslijeronimo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Nidia Jeronimo

ACTG 1054 OS1

August 30, 2024

Depreciation Expense
Year Straight line method Units of activity method Double declining
balance method
1 $71,250 $102,600 160,000
2 $71,250 $91,200 80,000
3 $71,250 $62,700 40,000
4 $71,250 $28,500 5,000
Total
end $285,000 $285,000 $285,000
of 4
years

a. The straight line method


Depreciation expense = (Cost - residual value) / useful life
= ($320,000 - $35,000) / 4
= $285,000/4
= $ 71,250

Straight line rate= 100 /4


= 25%
b. Units of Activity Method

Rate= Cost – residual value / Total Hours


= $320,000 - $35,000/ 20,000
= $285,000/ 20,000
= $14.25 per hr

Year Rate X Hour = Yearly Depreciation


1 $14.25 X 7,200 = $102,600
2 $14.25 X 6,400 = $91,200
3 $14.25 X 4,400 = $62,700
4 $14.25 x 2,000 = $28,500

c. Double declining balance method

Straight line rate= 100 /4 years


= 25%

Double declining balance rate = 25% x 2


= 50%

Compute the depreciation expense:

year Cost Accumulated Book value at X Double Depreciation Book value


Depreciation at the beginning declining for the Year at the end of
beginning of year of year balance the Year
rate
1 $320,000 $320,000 X 50% $160,000 $160,000
2 $320,000 160,000 $160,000 X 50% $80,000 $80,000
3 $320,000 240,000 $80,000 X 50% $40,000 $40,000

4 $320,000 280,000 $40,000 X 50% $5,000 $35,000

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