Question

# Depreciation by Three Methods; Partial Years Layton Company purchased tool sharpening equipment on October 1 for...

Depreciation by Three Methods; Partial Years

Layton Company purchased tool sharpening equipment on October 1 for \$108,000. The equipment was expected to have a useful life of three years, or 12,000 operating hours, and a residual value of \$7,200. The equipment was used for 1,350 hours during Year 1, 4,200 hours in Year 2, 3,650 hours in Year 3, and 2,800 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 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 \$

Depreciation under straight line method:

 Particulars amount(\$) Year 1 8600 [[(\$108000-\$7200)/2]×3/12] Year 2 33600 [[(\$108000-\$7200)/2]] Year 3 33600 [[(\$108000-\$7200)/2] Year 4 25200 [[(\$108000-\$7200)/2]×9/12]

Units output method

 Particulars amount(\$) Year 1 11340 [(108000-7200)×1350 hours/12000] Year 2 35280 [(\$108000-7200)×4200/12000hours] Year 3 30660 [(\$108000-\$7200)×3650 hours/12000hours] Year 4 23520 [(\$108000-\$7200)×2800/12000 hours]

Double declining method:

Rate of depreciation:1/3years×200%=66.67%

 Particulars amount(\$) Year 1 18001 [(\$108000×66.67%)×3/12] Year 2 60002 [(\$108000-18001]×66.67%] year 3 19999 [(\$89999-60002)×66.67%] Year 4 2798 [(\$108000-7200)-\$(18001-60002-19999)]

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