Question

calculate the amount of depreciation to report during the year ended december 31 for equipment that was purchased at a cost of $66,000 on october 1. the equipment has an estimated residual value of $1,000 and an estimated useful life of five years or 20,000 hours. required: assume the equipment was used for 1,000 hours from october 1 to december 31 and the company uses (a) straight-line, (b) double-declining-balance, or (c) units-of-production depreciation. (do not round intermediate calculations.)

Answer 1

Step-by-step explanation:

a) Straight line depreciation for 3months

=(Cost - Salvage value) * 3months

Number of useful life * 12 months

Straight line depreciation for 3months

=($66,000 - $1,000) * 3months

5 years

= 195000

60

= $3250

double declining rate = 2 * straight line depreciation rate

double declining rate= 2* (100/5)

double declining rate= 40%

therefore,

double declining balance depreciation for 3 months=

cost * double declining rate * 3 months

12 months

= $ 66000 * 40% * 3 months

12 months

= $ 6600

units of production depreciation = ( cost - salvage value) * actual hours

estimated useful life

= ($66000 -$1000) *1000 hours

20000 hrs

= $3250