Question

Blue Spruce Corp. purchased equipment on January 1, 2021 for $162,000. It is estimated that the equipment will have a $9,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 180,000 units over its 5-year life.

Answer the following independent questions.

Compute the amount of depreciation expense for the year ended December 31, 2021 using the straight-line method of depreciation.

Straight-line method

$enter the depreciation expense under the straight-line method for the year ended December 31, 2016 in dollars

per year

  

  

Question Part Score

--/3

If 16,000 units of product are produced in 2021 and 24,000 units are produced in 2022, what is the book value of the equipment at December 31, 2022? The company uses the units-of-activity depreciation method.

Book value at December 31, 2022

$enter the book value of the equipment at December 31, 2017 in dollars

  

  

Question Part Score

--/5

If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation—Equipment account at December 31, 2023?

Accumulated Depreciation—Equipment

Answer 1

1)	Straight line depreciation
	(cost - salvage value)/estimated useful lfe
	(162000-9000)/5
	30600
	Straight line method		30600	per year
2)	units activity method
	Depreciation rate
	(162000-9000)/180000
	0.85	per year
	book value
	original cost					162,000
	Accumulated dep		(16000+24000)*.85			-34000
	Book value					128,000
	Book value at December 31,2022				128,000
3)	Double declining method
	dep rate =	1/5*2
		40%
	year	Beg bal	Dep exp	Acc dep	Book value
	2021	162,000	64800	64800	97,200
	2022	97,200	38880	103680	58,320
	2023	58,320	23328	127008	34,992
	accumulated depreciation -Equipment				127008