The completion of depreciation schedules using the Straight-line, Units-of-production, and Double-declining-balance depreciation methods are as follows:
Depreciation Schedule - Straight-Line Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Value
Year 1 $27,000 $8,500 $8,500 $18,500
Year 2 $27,000 $8,500 $17,000 $10,000
Year 3 $27,000 $8,500 $25,500 $1,500
Depreciation Schedule - Units-of-Production Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Value
Year 1 $27,000 $6,120 $6,120 $20,880
Year 2 $27,000 $14,025 $20,145 $6,855
Year 3 $27,000 $5,355 $25,500 $1,500
Depreciation Schedule - Double-Declining-Balance Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Value
Year 1 $27,000 $18,090 $18,090 $8,910
Year 2 $27,000 $5,970 $24,060 $2,940
Year 3 $27,000 $1,440 $25,500 $1,500
Data and Calculations:
Cost of equipment = $27,000
Estimated residual value = $1,500
Depreciable amount = $25,500 ($27,000 - $1,500)
Estimated useful life = 3 years with 255,000 payments
Straight-line
Annual depreciation expense = $8,500 ($25,500/3)
Units-of-production
Depreciation rate per payment = $0.10 ($25,500/255,000)
Depreciation Expenses:
Year 1 = $6,120 ($0.10 x 61,200)
Year 2 = $14,025 ($0.10 x 140,250)
Year 3 = $5,355 ($0.10 x 53,550)
Total = $25,500
Double-declining-balance
Depreciation rate = 67% (100/3 x 2)
Year 1 = $18,090 ($27,000 x 67%)
Reduced balance = $8,910 ($27,000 - $18,090)
Year 2 = $5,970 ($8,910 x 67%)
Reduced balance = $2,940 ($8,910 - $5,970)
Year 3 = $1,440 ($2,940 - $1,500)
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