Financial Act Chpt 9 Notes

# Same depreciation each year depreciation expense 6000

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Unformatted text preview: years = \$6,000 a year, or \$500 per month. Same depreciation each year! Depreciation Expense \$ 6,000 Accumulated Depreciation-Equipment \$ 6,000 Units of Production: (\$20,000-\$2,000)/10,000 hours = \$18,000/10,000 =\$1.80 per baking hour. So, year 1: \$1.80 x 2,300 actual baking hours = \$4,140, Year 2 = \$1.80 x 3,000 baking hours = \$ 5,400. Year 1: Depreciation Expense \$ 4,140 Accumulated Depreciation-Equipment \$ 4,140 Year 2: Depreciation Expense \$5,400 Accumulated Depreciation-Equipment \$ 5,400 3. Double Declining Balance: 2 x the straight line rate. Straight line is 3 years, or 1/3 per year (33.33%), so twice that rate would be 2/3 per year (66.67%). And NO salvage value! Year 1: \$20,000 x 2/3 = Depreciation Expense \$ 13,333 Accumulated Depreciation - Equipment \$ 13,333 Year 2: (\$20,000 - \$13,333 accumulated depreciation) x 2/3 = \$4,445 Depreciation Expense \$4,445 Accumulated Depreciation - Equipment \$4,445 Depreciation under tax rules: Normally uses MACRS (Modified Accelerated Cost System), which...
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