Answer:
For (A) year 1 and year 2 is $70,000 respectively.
For (B) year 1 is $30,000 and year 2 is $56,250
For (C) year 1 is $140,000 and year 2 is $84,000 respectively.
Explanation:
Straight Line method : In straight line method, the amount of depreciation is remain same over a useful life.
Units of output: In this method, the depreciation is charged based on the material output or labor output rather than useful life.
Double Declining method : In this method, the depreciation is charged double on the amount which is come from straight line method.
(a). Straight Line method Formula :
= (Purchase price - Residual value ) ÷ Useful life
= ($360,000 - $10,000) ÷ 5
= $70,000
Since in straight line method, the depreciation amount is same for all years. So, for year 1 and for year 2 the depreciation is $70,000 respectively.
(b). Unit of output Formula
= (Purchase price - Residual Hours) ÷ total number of hours × Per year Hours )
For year 1 = ($360,000 -10,000 ) ÷ 14000 × 1200
= $30,000
For year 2 = ($360,000 -10,000 ) ÷ 14000 × 2250
= $56,250
(c) Double Declining method:
For year 1 = 2 × year 1 straight line method depreciation
= 2 × 70,000
= $140,000
For year 2 = 2 × (cost of asset - residual value - year 1 double declining method depreciation) × Rate
= 2 × ($350,000 - 10,000 - 140,000 ) × 40%
=$84000
where rate = (1 ÷ useful life) × 100 × 2 = (1 ÷ 5)× 100×2 = 40%
Hence, for (A) year 1 and year 2 is $70,000 respectively.
For (B) year 1 is $30,000 and year 2 is $56,250
For (C) year 1 is $140,000 and year 2 is $84,000 respectively.
