Question

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Required information The following information apples to the questlons displayed below] On October 1, 2021, the Allegheny Corporation purchased equlpment for $314,000. The estimated service life of the equipment is 10 years and the estimated residual value Is $6,000. The equlpment is expected to produce 550,000 unlts during its life. Required: Calculate depreciation for 2021 and 2022 using each of the following methods. Partial-year depreclation Is calculated based on the number of months the asset is In service. 1. Stralght line Straight-Line Depreciation Choose Numerator: Annual Depreciation Choose Denominator: Annual Depreciation Depreciation expense Year Fraction of Year 2021 3/12 Beginning Book Value 12/12 2022 Cost Cost minus Salvage

Answer 1

Cost of the equipment • $314,000 Residual Value - $ 6000 Service life of equipment - 10 years Depreciation for the year (12) Cost - Salvage Veilue $ 314000 - $6000 10 Years = $ 30800 Depreciation for the Year 2021 So, It is in service for only 3 months. depreciation for 3 months - $30800 x = $7700 It es in Service for whole year 30, depreciation = $30800