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    littlemoney08's Avatar
    littlemoney08 Posts: 9, Reputation: 1
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    #1

    Nov 13, 2009, 10:32 PM
    Depreciation and Calculations units of production
    Capt. George's, Inc. purchased equipment at the beginning of 2008 for $60,000. In addition, Capt. George's paid $2,000 for delivery of the equipment to its plant and $1,000 for installation of the equipment. The equipment has an estimated residual value of $7,000 and an estimated life of 7 years or 70,000 hours of operation. Capt. George's is looking at alternative depreciation methods for the equipment.
    Calculate the following (Use the next page to provide calculation and answer):

    A. The depreciation expense for the year 2008 using the straight-line depreciation method.

    B. The total accumulated depreciation at December 31, 2009, using the units-of-production depreciation method. Assume that the equipment is operated for 15,000 hours in 2008 and 12,000 hours in 2009.

    C. The book value of the equipment at December 31, 2008, using the double-declining-balance depreciation method.

    A. I did I got a total of 63,000 and I did 63000-7000/ 7 =8,000 8,000yr
    B. I really dk how to start with this one

    C. I am pretty sure how to do this one but would i use 60,000 as the book value in the beginning or 63000.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Nov 14, 2009, 12:26 AM

    A. I did I got a total of 63,000 and I did 63000-7000/ 7 =8,000 8,000yr
    B. I really dk how to start with this one

    C. I am pretty sure how to do this one but would i use 60,000 as the book value in the beginning or 63000.
    A. Correct
    B. (Cost - salvage value)/Total hours
    56.000/70,000 = 0.80 per hour. Accumulated depreciation 12/31 2009 is 27,000 x 0.80 = 21,600
    C. In Double declining method use double the straight line rate based on 8,000/56,000 = 14.28 x 2 or 28.57%. Calculate the depreciation for the first year on 63,000 and in the following years on the book value. However, in the 7th year make sure that the book value does not fall below the salvage value. Meaning the 7th year depreciation will be adjusted so as to get the balance of book value at 7,000.
    littlemoney08's Avatar
    littlemoney08 Posts: 9, Reputation: 1
    New Member
    		  
    #3

    Nov 14, 2009, 04:54 PM

    All right thanks so much for your help!! Yeah on C I know how to do the calculations just wasn't sure what number to start with. I really apperciate your help
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