Answer:
The computations are shown below:
Explanation:
The computations are shown below:
1. a) Straight-line method:
= (Original cost - expected residual value) ÷ (expected life)
= ($173,400 - $15,000) ÷ (8 years)
= (158,400) ÷ (8 years)
= $19,800
In this method, the depreciation is same for all the remaining useful life
(b) Double-declining balance method:
First we have to find the depreciation rate which is shown below:
= One ÷ useful life
= 1 ÷ 8
= 12.5%
Now the rate is double So, 25%
In year 1, the original cost is $173,400 so the depreciation is $43,350 after applying the 25% depreciation rate
(c) Units-of-production method:
= (Original cost - residual value) ÷ (estimated production)
= ($173,400 - $15,000 ) ÷ ($4,500,000 pages)
= ($158,400) ÷ ($4,500,000 pages)
= $0.0352
Now for the first year, it would be
= Production pages in first year × depreciation per page
= 675,000 pages × $0.0352
= $23,760
2. The book values are as follows
As we know that
Book value = Purchase cost - accumulated depreciation
a) Straight-line method:
= $173,400 - $19,800
= $153,600
(b) Double-declining balance method:
= $173,400 - $43,350
= $130,050
(c) Units-of-production method:
= $173,400 - $23,760
= $149,640
,
