Depreciation Expense Methods and Book Value
Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2019. The machine's residual value was $425 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies the first year and 400,000 the second year. Find the depreciation expense for 2018 and 2019 using the straight line method.
($8,700 - $425)/5 years = $1,655 / year
What is the book value for 2019 and 2018 after using the Straight Line Method?
2019: $8,700 - $1,655= $7,045 2020: $7,045 - $1,655= $5,390
What is the book value for 2019 and 2018 after using the Units of Production Method?
2019: $8,700 - $1,986= $6,714 2020: $6,714 - $1,655= $5,059
What is the book value for 2019 and 2018 after using the Double Declining Method?
2019: $8,700 - $3,480= $5,220 2020: $5,220 - $2,088= $3,132
Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2019. The machine's residual value was $425 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies the first year and 400,000 the second year. Find the depreciation expense for 2018 and 2019 using the Double Declining Method.
2019: $8,700 × (1/5 × 2)= $3,480 / year 2020: ($8,700 - $3,480) × (1/5 × 2)= $2,088 / year
Berkshire Corporation purchased a copying machine for $8,700 on January 1, 2019. The machine's residual value was $425 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies the first year and 400,000 the second year. Find the depreciation expense for 2018 and 2019 using the Units of Production Method.
2019: [($8,700 - $425)/2,000,000 copies] × 480,000 copies = $1,986 2020: [($8,700 - $425)/2,000,000 copies] × 400,000 copies = $1,655
