1 answer

Depreciation Handout Excel Company purchased a delivery van on January 1, 2012 for $33,000. Management has...

Question:




Depreciation Handout Excel Company purchased a delivery van on January 1, 2012 for $33,000. Management has estimated that equ
Units of Production Step 1: Depreciation per Unit Cost-Residual Value Total Estimated Units of Activity Step 2: Depreciation
Double Declining (accelerated method) 100% Years X 2 This method does NOT take into consideration the estimated residual valu
Depreciation Handout Excel Company purchased a delivery van on January 1, 2012 for $33,000. Management has estimated that equipment will have a useful life of five years or 100,000 hours. At the end of five years, management believes that equipment will be worth $3,000. The actual miles the van was driven is as follows: 2012 2013 2014 2015 2016 22,000 miles 24,000 miles 15,000 miles 20,000 miles 21,000 miles Straight line Depreciation Cost - Residual Value Years (Depreciable Cost) Year Depreciation Expense Accumulated Depreciation Book Value 2012 2013 2014 | 2015 2016 Journal Entries Straight line 2012 2015 2013 2016 2014
Units of Production Step 1: Depreciation per Unit Cost-Residual Value Total Estimated Units of Activity Step 2: Depreciation Expense Depreciation per Unit X Units of Activity Year Units Rate Depreciation Expense Accumulated Book Value Depreciation 2012 2013 2014 2015 2016 Journal Entries Units of Production 2012 2013 2014 2015 2016
Double Declining (accelerated method) 100% Years X 2 This method does NOT take into consideration the estimated residual value when calculating. Year Book Value Depreciation Expense Accumulated Depreciation 2012 2013 2014 2015 2016 Journal Entries 2012 2013 2014 2015 2016

Answers

Excel Company
1 Straight line method
Annual depreciation (Cost-Residual Value)/Years
=(33,000-3,000)/5
     6,000
Calculation
Year Depreciation expense Accumulated Depreciation Book Value Book Value
2012                                    6,000                                             6,000           27,000 =33,000-6,000
2013                                    6,000                                           12,000           21,000 =33,000-12,000
2014                                    6,000                                           18,000           15,000 =33,000-18,000
2015                                    6,000                                           24,000              9,000 =33,000-24,000
2016                                    6,000                                           30,000              3,000 =33,000-30,000
Cost less Accumulated Depreciation
Excel Company
Date Account Debit Credit
Straight line method
1-Jan-12 Delivery Van      33,000
Cash      33,000
31-Dec-12 Depreciation expense         6,000
Accumulated Depreciation-Delivery Van         6,000
31-Dec-13 Depreciation expense         6,000
Accumulated Depreciation-Delivery Van         6,000
31-Dec-14 Depreciation expense         6,000
Accumulated Depreciation-Delivery Van         6,000
31-Dec-15 Depreciation expense         6,000
Accumulated Depreciation-Delivery Van         6,000
31-Dec-16 Depreciation expense         6,000
Accumulated Depreciation-Delivery Van         6,000
2 Units of production method
Dep per unit (Cost-Residual Value)/Units of Activity
=(33,000-3,000)/100,000
       0.30
Year Units Rate Depreciation expense Accumulated Depreciation Book value Units Depreciation expense
2012    22,000    0.30                                    6,600                                             6,600           26,400 =22,000*0.30
2013    24,000    0.30                                    7,200                                           13,800           19,200 =24,000*0.30
2014    15,000    0.30                                    4,500                                           18,300           14,700 =15,000*0.30
2015    20,000    0.30                                    6,000                                           24,300              8,700
2016    19,000    0.30                                    5,700                                           30,000              3,000 =100,000-SUM(C20:C23)
=100,000-22,000-24,000-15,000-20,000
Date Account Debit Credit
Units of production method
1-Jan-12 Delivery Van      33,000
Cash      33,000
31-Dec-12 Depreciation expense         6,600
Accumulated Depreciation-Delivery Van         6,600
31-Dec-13 Depreciation expense         7,200
Accumulated Depreciation-Delivery Van         7,200
31-Dec-14 Depreciation expense         4,500
Accumulated Depreciation-Delivery Van         4,500
31-Dec-15 Depreciation expense         6,000
Accumulated Depreciation-Delivery Van         6,000
31-Dec-16 Depreciation expense         5,700
Accumulated Depreciation-Delivery Van         5,700
3 Double declining balance method
Double declining rate 100%/Years*2
=100%/5*2
40%
Year Depreciation expense Accumulated Depreciation Book value Depreciation expense
2012                                 13,200                                           13,200           19,800 =33,000*40%
2013                                    7,920                                           21,120           11,880 =19,800*40%
2014                                    4,752                                           25,872              7,128 =11,880*40%
2015                                    2,851                                           28,723              4,277 =7,128*40%
2016                                    1,277                                           30,000              3,000 =4,277-3,000
Note
Last year dep of 1,277 is remaining figure to keep book value at residual value of 3,000
Double declining balance method
1-Jan-12 Delivery Van      33,000
Cash      33,000
31-Dec-12 Depreciation expense      13,200
Accumulated Depreciation-Delivery Van      13,200
31-Dec-13 Depreciation expense         7,920
Accumulated Depreciation-Delivery Van         7,920
31-Dec-14 Depreciation expense         4,752
Accumulated Depreciation-Delivery Van         4,752
31-Dec-15 Depreciation expense         2,851
Accumulated Depreciation-Delivery Van         2,851
31-Dec-16 Depreciation expense         1,277
Accumulated Depreciation-Delivery Van         1,277
.

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