Answer:
<u>Straight line:</u>
2014 $ 65,250
2015 $ 87,000
2016 $ 87,000
2017 $ 21,750
<u>units-of-output method:</u>
2014 $ 108,750
2015 $ 79,750
2016 $ 58,000
2017 $ 14,500
<u>dobule declining method</u>
2014 135,000
2015 45,000
2016 15,000
2017 9,000
Explanation:
<u>Straight line:</u>
(cost - salvage value) / useful life
(270,000 - 9,000)/3 = 87,000 per complete year
First year: from April 1st to December 31th
87,000 x 9/12 = 65,250
Second and third year are complete year thus, 87,000
fourth year: from Jan 1st to March 31th:
87,000 x 3/12 = 21,750
<u>units-of-output method:</u>
(cost - salvage value) / unit of output
261,000 / 18,000 = 14.5 per hour
We multiply each year hours by this rate
7,500 x 14.5 = 108,750
5,500x 14.5 = 79,750
4,000x 14.5 = 58,000
1,000 x 14.5 = 14,500
<em><u>double declining </u></em>
we multiply by twice the rate of of straight line:
1/3 x 2 = 2/3 we depreciate this amount of the carrying vbalue per year
Last year we adjust to obtain the residual value
Year Beginning Rate Dep expense Carrying value
2014 270,000 0.50 135,000 135,000
2015 135,000 0.67 90,000 45,000
2016 45,000 0.67 30,000 15,000
2017 15,000 6,000 9,000
