Answer:
(a). Depreciation for 1st year= $24,000
Depreciation for 2nd year= $24,000
(b). 1st Year Depreciation = $20,000
for 2nd year depreciation = $26,000
(c) 1st year Depreciation= $60,000
2nd year Depreciation = $36,000
Explanation:
a).
Annual Depreciation of Equipment = (Cost of Equipment - Residual Value) ÷ Useful Life of Equipment
= ($150,000 - $30,000) ÷ 5
= $24,000
Rate of Straight Line Depreciation = Annual Depreciation of Equipment ÷ (Cost of Equipment - Residual Value) × 100
= 24,000 ÷ ( $150,000 - 30,000) × 100
= $24,000 ÷ $120,000 × 100 = 20%
Depreciation for 1st year= $24,000
Depreciation for 2nd year= $24,000
b). Unit Of Production For 1st Year Depreciation= (Cost Of Equipment -Residual Value) × Annual Production Units ÷ Total Operating Hours
= ($150,000 - $30,000) × 2,500 ÷ 15,000 = $20,000
Unit of Production for 2nd year depreciation = ( $150,000 - $30,000) × 32,50 ÷ 15,000
= $26,000
c). Declining Balance Depreciation Rate = Straight Line Depreciation Rate × 2
= 20% × 2 = 40% (Because Declining Balance at Twice the Straight Line Rate)
1st year Depreciation= $150,000 × 40÷100 = $60,000
2nd year Depreciation = ($150,000 - $60,000) × 40÷100 =$36,000
