Question

Need help with Part 2 and 3. Part 1 I have completed and the answers are correct.

Part 1 Answers: Problem 7.5A Part 1 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. Year 1 2 3 4 UNIVERSITY CAR WASH Depreciation Schedule-Straight-Line End of year amounts Depreciation Accumulated Book Value Expense Depreciation $ 32.250 $ 32.250 $ 180.750 3 32.250 2.250 64,500 64,5007 1 48,500 3 2.250 9.750 116.250 32.250 129,000 84.000 32.250 161.250 51.750 32.250 193,500 19.500 $ 193.500 5 6 Total Question: Required information Problem 7-5A Determine depreciation under three methods (LO7.4) (The following information applies to the questions displayed below.] University Car Wash built a deluxe car wash across the street from campus. The new machines cost $213.000 Including Installation. The company estimates that the equipment will have a residual value of $19.500. University Car Wash also estimates It will use the machine for six years or about 12.500 total hours. Actual use per year was as follows: Hours Used 3.000 1,200 1.300 2,700 2. See 1,880 'roblem 7-5A Part 2 - Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate alculations.) UNIVERSITY CAR WASH Depreciation Schedule-Double-Declining-Balance End of year amounts Depreciation Accumulated Book Value Expense Depreciation Total

Answer 1

Cost of the Machine 213000 Less: salvage Value 19500 Depreciatble Value 193500 Estmated Life 12500 Units Straight Line Method Annual Depreciation : Depreciable Value / Life Depreciation Per annuam : 193500/6 32250 Depreciation Accumulated Expenses Depreciation Book Value At Acquisition 213000 32250 32250 180750 2 32250 64500 148500 32250 96750 116250 14 32250 129000 84000 32250 161250 51750 6 32250 193500 19500 Total 193500 Year 31

33% Double Decline Method Annual Depreciation : 1/Life *2 Depreciation Rate : (1/6)*2 Depreciation Expenses Accumulated Book value @33% Depreciation Bookvale 213000 71000 71000 142000 142000 47333 118333 94667 94667 31556 149889 63111 63111 21037 170926 42074 42074 14025 184951 28049 28049 8549 193500 19500 Depreciation Accumulated Expenses Depreciation Book Value 71000 71000 142000 47333 118333 94667 31556 149889 63111 21037 170926 42074 14025 184951 28049 8549 193500 19500 Total 193500 Year 3

Activity Based Method Annual Depreciation : Depreciable Value / Life Depreciation Per unit : 193500/12500 15.48 Year Units Rate Depreciation 1 3000 15.48 46440 1200 15.48 18576 1300 15.48 20124 2700 15.48 41796 2500 15.48 38700 1800 15.48 27864 Depreciation Accumulated Year Expenses Depreciation Book Value 46440 46440 166560 18576 65016 147984 20124 85140 127860 41796 126936 86064 38700 165636 47364 27864 193500 19500 Total 193500