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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