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Helix Company purchased tool sharpening equipment in April 1, 2010 for $72,000. The equipment was expected...

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Accounting

Helix Company purchased tool sharpening equipment inApril 1, 2010 for $72,000. The equipment was expected to have auseful life of four years, or 9,000 operating hours, and a residualvalue of $2,700. The equipment was used for 2,400 hours during2010, 4,000 hours in 2011, 2,000 hours in 2012, and 600 hours in2013.

Instructions: Determine the amount of depreciationexpense for the years ended December 31, 2010, 2011, 2012, and 2013by each of the following methods:

1. Straight-line

2. The units of activity method

3. Double Declining balance method

Answer & Explanation Solved by verified expert
3.7 Ratings (282 Votes)

Answer:

a)

particulars Amount
2010 12994
2011 17325
2012 17325
2013 4331

Depreciation expense 2010= (72000-2700)/4 x 9/12
=17325 x 9/12
=12994
Therefore the amount of depreciation expense using the straight line method is $12994.
Depreciation for the year ended December 31 2011, 2012 is $17325
Depreciation expense 2013= (72000-2700)/4 x 3/12
=17325 x 3/12
=4331

b)

year hours used depreciation rate depreciation
2010 2400 7.7 18480
2011 4000 7.7 30800
2012 2000 7.7 15400
2013 600 7.7 46

Depreciation rate per hour = (72000-2700)/9000)=7.7

c)

particulars amount
2010 27000
2011 22500
2012 11250
2013 11250

Depreciation for the year 2010=72000 x 2/4 x 9/12 =27000
Depreciation for the year 2011=(72000-27000) x 2/4 =22500
Depreciation for the year 2012=(72000-27000-22500) x 2/4  =11250
Book value on 2012=(72000-27000-22500-11250)=11250
Depreciation for the year 2013=(11250-2700) =8550
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