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04-04-12Class22 EndCh11 begin Ch 16 dilutive secb

# Depreciation method of cost allocation depreciation

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Unformatted text preview: of use or production). Hybrid or combination methods. Accelerated methods Special methods LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Activity Method Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Illustration: If Stanley uses the crane for 4,000 hours the first year, the depreciation charge is: Illustration 11-3 Chapter 18-14 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Straight-Line Method Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Illustration: Stanley computes depreciation as follows: Illustration 11-4 Chapter 18-15 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Sum-of-the-Years’-Digits Depreciation Sum-of-the-Years’-Digits Depreciation Sum-of-the-Years’-Digits Depreciation Sum-of-the-Years’-Digits Decreasing-Charge Methods Includes SYD & DDB Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Sum-of-the-Years’-Digits. Each fraction uses the sum of the years as a denominator (5 + 4 + 3 + 2 + 1 = 15). The numerator is the number of years of estimated life remaining as of the beginning of the year. Chapter 18-16 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Sum-of-the-Years’-Digits Illustration 11-6 Chapter 18-17 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Double Declining-Balance Method. Double Declining-Balance Method. Double Decreasing-Charge Methods Includes SYD & DDB Illustration 11-2 Stanley Coal Stanley Mines Facts Mines Declining-Balance Method. Utilizes a depreciation rate (percentage) that is some multiple of the straight­line method. Chapter 18-18 Does not deduct the salvage value in computing the depreciation base. LO 3 Compare activity, straight-line, and decreasingLO charge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Double Declining-Balance Method Illustration 11-7 Chapter 18-19 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation E11-5 (Depreciation Computations—Four Methods): KC Corporation purchased a new machine for its assembly process on August 1, 2010. The cost of this machine was \$150,000. The company estimated that the machine would have a salvage value of \$24,000 at the end of its service life. Its life is estimated at 5 years and its working hours are estimated at 21,000 hours. Year­end is December 31. Instructions: Compute the depreciation expense under the following methods. (a) Straight­line depreciation. (c) Sum­of­the­years’­digits. (b) Activity method (d) Double­declining balance. Chapter 18-20 LO 3 Compare activity, straight-line, and decreasingcharge methods of depreciation. Depreciation -- Method of Cost Allocation Depreciation Method of Cost Allocation Straight-line Method Year Depreciable Base Annual Expense 2010 \$ 126, 000 / 5 = \$ 25, 200 2 011 126, 000 / 5 = 2 012 126, 000 / 5 2 013 126,...
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