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5 March, 06:15

Sushi Corp. purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $54,000. The equipment has an estimated residual value of $2,700. The equipment is expected to process 271,000 payments over its three-useful Life. Per yea expected payment transactions are 65,040, year 1, 149,050, year 2,56,910, year 3. Required:Complete a depreciation schedule for each of the alternative methods. 1. Straight line2. Units-of-production3. Double declining balance

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  1. 5 March, 07:23
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    Answer and Explanation:

    The preparation of Straight line method, Units of production method and Double declining method is shown below:-

    1. Straight line method

    Income statement Balance Sheet

    Year Depreciation Cost Accumulated Book value

    expense depreciation

    At acquisition $54,000

    1 $17,100 $54,000 $17,100 $36,900

    2 $17,100 $54,000 $34,200 $19,800

    3 $17,100 $54,000 $51,300 $2,700

    Working Note

    Depreciation expenses

    For 1 Year ($54,000 - $2,700) : 3

    = $17,100

    For 2 year ($54,000 - $2,700) : 3

    = $17,100

    For 3 year ($54,000 - $2,700) : 3

    = $17,100

    2. Units of production method

    Income statement Balance Sheet

    Year Depreciation Cost Accumulated Book value

    expense depreciation

    At acquisition $54,000

    1 $12,312 $54,000 $12,312 $41,688

    2 $28,215 $54,000 $40,527 $13,473

    3 $10,773 $54,000 $51,300 $2,700

    Working Note

    For 1 year ($54,000 - $2,700) : 271,000 * $65,040 = $12,312

    For 2 year ($54,000 - $2,700) : 271,000 * $149,050 = $28,215

    For 3 year ($54,000 - $2,700) : 271,000 * $56,910 = $10,773

    3. Double declining method

    Income statement Balance Sheet

    Year Depreciation Cost Accumulated Book value

    expense depreciation

    At acquisition $54,000

    1 $36,000 $54,000 $36,000 $18,000

    2 $12,000 $54,000 $48,000 $6,000

    3 $3,300 $54,000 $51,300 $2,700

    Working Note

    For 1 year = $54,000 : 3 * 2 = $36,000

    For 2 year = $18,000 : 3 * 2 = $12,000

    For 3 year = 6,000 - 2,700 = $3,300

    Therefore the preparation of depreciation schedule for each of the alternative methods is prepared above.
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