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Depreciation Method Double Declining Use the following information for the next four cases: How much is the depreciation expense in the 2nd year? illustration Double Decliningrate = Ch On January 1, 20x1, SIMPLETON FOOL CO. acquired equipment with an estimated useful life of 4 years and a residual value of P80,000 for a total purchase cost of P400,000 50% Dec 31, 20x1 400,000 50% 200,000 Dec 31, 20x1 200,000 50% 100,000 Straight-line method How much is the depreciation expense in 2nd year? a 100,000 b. 80,000 C. 200,000 d. 160,000 Illustration: Units of production method (Activity method or variable-charge method) The equipment has an expected total output of 160,000 units an expected total input of 40,000 hours. Annual Depreciation= Depreciable amount Useful life Information on actual operations is presented below: 400,000-30,000 4 Year Units produced Manufacturing hours 80,000 20x1 60,000 16,000 Sum-of-the-years digits (SYD) method 20x2 30,000 8,000 How much is the depreciation expense in the 3rd year? 20x3 45,000 12,000 SYD Denominator = Life Life+1 2 20x4 25,000 4,000 X 160,000 40.000 4 x 4+1 12 If Simpleton Co. uses the output method, how much is the depreciation expense in the s'a year? I 10 Depreciable amount Depreciable amount = Estimated total units of output Initial cost of equipment 400,000 320,000 Residual value 80,000 160,000 320,000 2 per unit 320,000 X 4/10 128,000 20x1 2 X 60,000 120,000 320,000 X 3/10 96,000 20x2 2 x 30,000 60,000 320,000 X 2/10 64,000 20x3 2 x 45,000 90,000 ma ILL C 0 Depreciation Method Double Declining Use the following information for the next four cases: How much is the depreciation expense in the 2nd year? illustration Double Decliningrate = Ch On January 1, 20x1, SIMPLETON FOOL CO. acquired equipment with an estimated useful life of 4 years and a residual value of P80,000 for a total purchase cost of P400,000 50% Dec 31, 20x1 400,000 50% 200,000 Dec 31, 20x1 200,000 50% 100,000 Straight-line method How much is the depreciation expense in 2nd year? a 100,000 b. 80,000 C. 200,000 d. 160,000 Illustration: Units of production method (Activity method or variable-charge method) The equipment has an expected total output of 160,000 units an expected total input of 40,000 hours. Annual Depreciation= Depreciable amount Useful life Information on actual operations is presented below: 400,000-30,000 4 Year Units produced Manufacturing hours 80,000 20x1 60,000 16,000 Sum-of-the-years digits (SYD) method 20x2 30,000 8,000 How much is the depreciation expense in the 3rd year? 20x3 45,000 12,000 SYD Denominator = Life Life+1 2 20x4 25,000 4,000 X 160,000 40.000 4 x 4+1 12 If Simpleton Co. uses the output method, how much is the depreciation expense in the s'a year? I 10 Depreciable amount Depreciable amount = Estimated total units of output Initial cost of equipment 400,000 320,000 Residual value 80,000 160,000 320,000 2 per unit 320,000 X 4/10 128,000 20x1 2 X 60,000 120,000 320,000 X 3/10 96,000 20x2 2 x 30,000 60,000 320,000 X 2/10 64,000 20x3 2 x 45,000 90,000 ma ILL C 0

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