Question

April 1 for $270,000. The equipment was expected Obj. 2 Perdue Company purchased equipment on April 1 for $270,000. The eau to have a useful life of three years or 18,000 operating hours, and a residual value of $0 000 The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 24000 . Year 3, and 1,000 hours in Year 4. Instructions 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) the units-of-activity method, and (c) the double-declining-balance method.

Answer 1

Straight Line
Date	Cost of asset	Depreciable cost	Useful life	Depreciation expenses	Accumulated Depreciation	Book value
Year 1-9 months	$2,70,000	$2,61,000	3 Years	$65,250	$65,250	$2,04,750
Year 2	$2,70,000	$2,61,000	3 Years	$87,000	$1,52,250	$1,17,750
Year 3	$2,70,000	$2,61,000	3 Years	$87,000	$2,39,250	$30,750
Year 4-3 months	$2,70,000	$2,61,000	3 Years	$21,750	$2,61,000	$9,000
Units of activity
Date	Cost of asset	Depreciation per miles	No. of miles	Depreciation expenses	Accumulated Depreciation	Book value
Year 1-9 months	$2,70,000	$14.50	7500	$1,08,750	$1,08,750	$1,61,250
Year 2	$2,70,000	$14.50	5500	$79,750	$1,88,500	$81,500
Year 3	$2,70,000	$14.50	4000	$58,000	$2,46,500	$23,500
Year 4-3 months	$2,70,000	$14.50	1000	$14,500	$2,61,000	$9,000
Double Declining balance
Date	Cost of asset	Book Value	DDB Rate	Depreciation expenses	Accumulated Depreciation	Book value
Year 1-9 months	$2,70,000	$2,70,000	25.00%	$67,500	$67,500	$2,02,500
Year 2	$2,70,000	$2,02,500.00	33.33%	$67,500	$1,35,000	$1,35,000
Year 3	$2,70,000	$1,35,000.00	33.33%	$44,996	$1,79,995	$90,005
Year 4-3 months	$2,70,000	$90,004.50	8.33%	$7,500	$1,87,496	$82,504