book value accounting problem

Accounting
Tutor: None Selected Time limit: 1 Day

i am stuck on just requirement 3a of this problem. here are pic of the problem

http://imgur.com/wPk5fQA

http://imgur.com/DiV6wpC

pic 1 is the info you need to solve the problem. pic 2 is the problem that needs to be solved

thanks in advance

Mar 7th, 2015

Cost = $42,000

Estimated life = 5 years (or) 200,000 hours

Salvage hours = $2,000

Company A: Straight-line depreciation

Depreciation expense every year = (Cost – Salvage value)/Estimated life

( ($42,000 - $2,000)/5 years

( $8,000 per year

Therefore, Depreciation expense for:

2008:   Book Value=42000-8400=33600

2009:   Book Value=33600-8400=25200

2010:   Book Value=25200-8400=16800

Company-B: Double-declining balance method


Depreciation expense = Beginning of the year balance x Double-declining rate

Double declining rate = Straight line rate x 2 = 20% (for 5 years life) x 2 = 40%

2008: $42,000 x 40% ( $16,800  Book Value=42000-16800=$25200

2009: ($25200 x 40% ( $10,080   Book Value=25200-10080=$15120

2010: ($15120 x 40% ( $6,048  Book value=15120-6048=$9072

Company C: Units of production method

Depreciation expense per hour = ($42,000 - $2,000)/200,000 hours ( $0.20 per hour

Depreciation expense for:

2008: 50,000 hours x $0.21 per hour ( $10,500  Book Value=42000-10500=$31500

2009: 55,000 hours x $0.21per hour ( $11,550  Book Value=31500-11550=$19950

2010: 40,000 hours x $0.21 per hour ( $8,400  Book Value=19950-8400=$11550


Mar 7th, 2015

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