Question

Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $42,390. The equipment was expected to have a useful life of three years, or 4,320 operating hours, and a residual value of $1,350. The equipment was used for 800 hours during Year 1, 1,500 hours in Year 2, 1,300 hours in Year 3, and 720 hours in Year 4.

Required:

Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

b. Units-of-output method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

c. Double-declining-balance method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

Answer 1

Cost of Equipment				42390
Less: Residual Value				1350
Depreciable amount				41040
Life				3 years
Annual depreciation				13680
Depreciation per hour		(41040/4320)		9.5
Rate of SLM:				33.33%
Rate of DDM:				66.67%
Schedule of Depreciation under SLM:
Year	Annual dep	Period	Depreciation expense
1	13680	9 months	10260
2	13680	12 months	13680
3	13680	12 months	13680
4	13680	3 months	3420
Schedule of Depreciation under Unit of output method
Year	Hours	Dep rate	Dep exp
1	800	9.5	7600
2	1500	9.5	14250
3	1300	9.5	12350
4	720	9.5	6840
Schedule of Dep under DDM:
Year	Beg. BV	Dep rate	Dep Exp	Ending BV
1	42390	66.67%	21195	21195
2	21195	66.67%	14130	7065
3	7065	66.67%	4710	2355
4	2355	66.67%	1005	1350