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Problem 9-5A Calculating depreciation—partial periods LO2, 3 West Coast Tours runs boat tours along the west...

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Accounting

Problem 9-5A Calculating depreciation—partial periods LO2, 3

West Coast Tours runs boat tours along the west coast of BritishColumbia. On March 5, 2020, it purchased, with cash, a cruisingboat for $936,000, having a useful life of 10 years or 13,800hours, with a residual value of $246,000. The company’s year-end isDecember 31.

Required:
Calculate depreciation expense for the fiscal years 2020, 2021, and2022 by completing a schedule. (Note: Depreciation is calculated tothe nearest month. Assume actual hours of service were: 2020, 900;2021, 1,960; 2022, 1,715.)
Depreciation MethodYearStraight-LineDouble-DecliningBalanceUnits-of-Production202020212022

Answer & Explanation Solved by verified expert
4.4 Ratings (972 Votes)

Straight Line method
Date Cost of asset Depreciable cost Depreciation rate Depreciation expenses Accumulated Depreciation Book value
2020-10 months $9,36,000 $6,90,000 8.33% $57,477 $57,477 $8,78,523
2021 $9,36,000 $6,90,000 10.00% $69,000 $1,26,477 $8,09,523
2022 $9,36,000 $6,90,000 10.00% $69,000 $1,95,477 $7,40,523
Double Declining balance
Date Cost of asset Book Value DDB Rate Depreciation expenses Accumulated Depreciation Book value
2020-10 months $9,36,000 $9,36,000 16.66% $1,55,938 $1,55,938 $7,80,062
2021 $9,36,000 $7,80,062 20.00% $1,56,012 $3,11,950 $6,24,050
2022 $9,36,000 $6,24,050 20.00% $1,24,810 $4,36,760 $4,99,240
Units of production
Date Depreciable cost Depreciation per hour No. of hours Depreciation expenses Accumulated Depreciation Book value
2020-10 months $6,90,000 $50 900 $45,000 $45,000 $8,91,000
2021 $6,90,000 $50 1960 $98,000 $1,43,000 $7,93,000
2022 $6,90,000 $50 1715 $85,750 $2,28,750 $7,07,250

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