Emerson purchased a car intended for business use on January 1. The car’s useful life is 8 years and has a residual value of $6,000. The car was purchased for $30,000. Shipping cost $1,000. Taxes applied were $3,000. Because Emerson financed it, she paid $500 for interest expense. Using the Straight Line Method and the Units of Production Method, calculate the accumulated depreciation, depreciation expense, and the book value for the 1st three years. Table amounts should be the expected amounts on December 31st.
Total production is 560,000 pages.
Year 1- 90,000 pages
Year 2- 80,000 pages
Year 3- 70,000 pages
Year 4- 60,000 pages
How much does the printer cost? ___________
Formula IN WORDS:_____________________
Units of Production calculation:
|
Year 1 |
Depreciation Expense |
Accumulated Depreciation |
Book Value |
|
Year 2 |
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|
Year 3 |
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|
Year 4 |
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--Working
|
A = $ 30000 + 1000 +3000 |
Cost |
$ 34,000.00 |
|
B |
Residual Value |
$ 6,000.00 |
|
C=A - B |
Depreciable base |
$ 28,000.00 |
|
D |
Usage |
560,000 page |
|
E = C/D |
Depreciation per ….. |
$ 0.05 per page |
|
Year |
Book Value |
Usage |
Depreciation expense |
Ending Book Value |
Accumulated Depreciation |
|
1 |
$ 34,000.00 |
90,000 |
$ 4,500.00 |
$ 29,500.00 |
$ 4,500.00 |
|
2 |
$ 29,500.00 |
80,000 |
$ 4,000.00 |
$ 25,500.00 |
$ 8,500.00 |
|
3 |
$ 25,500.00 |
70,000 |
$ 3,500.00 |
$ 22,000.00 |
$ 12,000.00 |
|
4 |
$ 22,000.00 |
60,000 |
$ 3,000.00 |
$ 19,000.00 |
$ 15,000.00 |
Formula IN WORDS: (Cost – residual value) / No . of pages during life
|
Depreciation Expense |
Accumulated Depreciation |
Book Value |
|
|
Year 1 |
$ 4,500.00 |
$ 4,500.00 |
$ 29,500.00 |
|
Year 2 |
$ 4,000.00 |
$ 8,500.00 |
$ 25,500.00 |
|
Year 3 |
$ 3,500.00 |
$ 12,000.00 |
$ 22,000.00 |
|
Year 4 |
$ 3,000.00 |
$ 15,000.00 |
$ 19,000.00 |
|
TOTAL |
$ 15,000.00 |
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