Answer:
a. Straight-line method.
Year Depreciation expense ($)
1 10,530
2 14,040
3 14,040
4 3,510
b. Units-of-production method.
Year Depreciation expense ($)
1 7,800
2 14,950
3 12,350
4 7,020
c. Double-declining balance method
Year Depreciation expense ($)
1 21,735
2 14,490
3 4,830
4 1,065
Explanation:
(a) the straight-line method
Note: See part a of the attached excel file for the depreciation schedule for Straight-line method.
In the attached excel file, the depreciation rate used for the Straight-line method is calculated as follows:
Straight line depreciation rate = 1 / Estimated useful life = 1 / 3 = 0.3333, or 33.33%
(b) units-of-output method
Note: See part b of the attached excel file for the depreciation schedule for units-of-production method.
(c) the double-declining-balance method.
Note: See part c of the attached excel file for the depreciation schedule for double-declining-balance method.
In the attached excel file, the depreciation rate used for the Double- declining-balance method is calculated as follows:
Double-declining depreciation rate = Straight line depreciation rate * 2 = (1/3) * 2 = 0.666667, or 66.6667%
Note:
Under this double-declining-balance method, the depreciation expenses for Year 4 is calculated by deducting the residual value of $1,350 from the Year 4 Beginning depreciable amount (i.e. $2,415 - $1,350 = $1,065). The residual value of $1,350 therefore represents the book value at the end of Year 4.
