Question

! Required information [The following information applies to the questions displayed below.] On January 1, 2021, the Allegheny Corporation purchased equipment for $235,000. The estimated service life of the equipment is 10 years and the estimated residual value is $15,000. The equipment is expected to produce 260,000 units during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. 1. Sum-of-the-years'-digits (Do not round intermediate calculations. Round final answers to the nearest whole dollar amount.) Depreciation Year expense 2021 2022 2. One hundred fifty percent declining balance. (Round final answers to the nearest whole dollar amount.) Depreciation Year expense 2021 2022 3. Assume instead the equipment was purchased on October 1, 2021. Calculate depreciation for 2021 and 2022 using each of the two methods. Partial-year depreciation is calculated based on the number of months the asset is in service. (Do not round intermediate answers and round your answers to the nearest whole dollar amount.) 2021 2022 Sum-of-the-years' digits One hundred fifty percent declining balance

Answer 1

Sum of Year method:
Depreciation expenses for 2021 =($235,000 - $15,000)*10/55 =$40,000
Depreciation expenses for 2022 =($235,000 - $15,000)*9/55 =$36,000
150% Declining Balance method:
Depreciation expenses for 2021 =$235,000*10%*1.50 =$35,250
Depreciation expenses for 2022 =($235,000 - $35,250)*10%*1.5 =$29,962 or $29,963
If the Asset is purchased on oct 1,2021
Depreciation expenses for 2021 =($235,000 - $15,000)*10/55 =$40,000*3/12 =$10,000
Depreciation expenses for 2022 =($235,000 - $15,000)*9/55 =$36,000
Depreciation expenses for 2021 =$235,000*10%*1.50 =$35,250*3/12 =$8,813
Depreciation expenses for 2022 =($235,000 - $8,813)*10%*1.5 =$33,928