Question

Hubbard Woods Inc. purchased new equipment for $5,000. The equipment has an estimated useful life of 8,000 hours and was used for 2,400 hours in year 1, for 2,000 hours in year 2, for 2,200 hours in year 3, and for 1,400 hours in year 4. Prepare a depreciation schedule for the new equipment using the following column headings: Year, Computation, Depreciation Expense, Accumulated Depreciation, and Book Value. Round to the nearest dollar.

Answer 1

Cost of equipment = $5,000

Estimated useful hours = 8,000

Depreciation expense per hour = Cost of equipment/Estimated useful hours

= 5,000/8,000

= $0.625

Depreciation schedule

Year	Computation (Number of hours x Depreciation expense per hour)	Depreciation expense	Accumulated depreciation	Book value (Cost - Accumulated depreciation)
1	2,400 x 0.625	1,500	1,500	5,000 - 1,500 = 3,500
2	2,000 x 0.625	1,250	2,750	5,000 - 2,750 = 2,250
3	2,200 x 0.625	1,375	4,125	5,000 - 4,125 = 875
4	1,400 x 0.625	875	5,000	5,000 - 5,000 = 0
		5,000

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