Question

# Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for \$42,390. The...

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 \$

 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