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    IA 1 Valix 2020 Ver. Problem 27-1 - Problem 27-2

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    Ariean Joy Dequiña
    The document contains three examples of depreciation calculations using different methods: 1) Straight line method calculates depreciation evenly over the useful life. For a $60,000 asset over 5 years, annual depreciation is $12,000. 2) Service hours method calculates depreciation based on hours of use, using a rate per hour. A $60,000 asset used over 60,000 hours depreciates $10 per hour. 3) Production method calculates depreciation based on units of output, using a rate per unit. A $60,000 asset used over 150,000 units depreciates $4 per unit.

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    IA 1 Valix 2020 Ver. Problem 27-1 - Problem 27-2

    Uploaded by

    Ariean Joy Dequiña
    1K views5 pages
    The document contains three examples of depreciation calculations using different methods: 1) Straight line method calculates depreciation evenly over the useful life. For a $60,000 asset over 5 years, annual depreciation is $12,000. 2) Service hours method calculates depreciation based on hours of use, using a rate per hour. A $60,000 asset used over 60,000 hours depreciates $10 per hour. 3) Production method calculates depreciation based on units of output, using a rate per unit. A $60,000 asset used over 150,000 units depreciates $4 per unit.

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    The document contains three examples of depreciation calculations using different methods: 1) Straight line method calculates depreciation evenly over the useful life. For a $60,000 asset over 5 years, annual depreciation is $12,000. 2) Service hours method calculates depreciation based on hours of use, using a rate per hour. A $60,000 asset used over 60,000 hours depreciates $10 per hour. 3) Production method calculates depreciation based on units of output, using a rate per unit. A $60,000 asset used over 150,000 units depreciates $4 per unit.

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    © All Rights Reserved
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    1K views5 pages

    IA 1 Valix 2020 Ver. Problem 27-1 - Problem 27-2

    Uploaded by

    Ariean Joy Dequiña
    The document contains three examples of depreciation calculations using different methods: 1) Straight line method calculates depreciation evenly over the useful life. For a $60,000 asset over 5 years, annual depreciation is $12,000. 2) Service hours method calculates depreciation based on hours of use, using a rate per hour. A $60,000 asset used over 60,000 hours depreciates $10 per hour. 3) Production method calculates depreciation based on units of output, using a rate per unit. A $60,000 asset used over 150,000 units depreciates $4 per unit.

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    © All Rights Reserved
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    of 5

    PROBLEM 27 - 1 (IAA)

    a. Straight Line Method


    Cost 635000
    Residual Value 35000
    Depreciable Amount 600000
    Useful Life 5
    Annual Depreciation 120000

    Accumulated
    Depreciation Depreciation Carrying Amount
    Acquisition Cost 635000
    1st
    Year 120000 120000 515000
    2nd
    Year 120000 240000 395000
    3rd
    Year 120000 360000 275000
    4th
    Year 120000 480000 155000
    5th
    Year 120000 600000 35000
    600000

    b. Service Hours Method


    Depreciable Amount 600000
    Useful Life in Terms of Service Hours 60000
    Rate per Hour 10

    Depreciatio Accumulated
    n Depreciation Carrying Amount
    Acquisition Cost 600000
    1st Year 14000 10 140000 140000 460000
    2nd Year 13000 10 130000 270000 330000
    3rd Year 10000 10 100000 370000 230000
    4th Year 11000 10 110000 480000 120000
    5th Year 12000 10 120000 600000 0

    c. Production Method
    Depreciable Amount 600000
    Useful Life in Terms of Units of Output 150000
    Rate per Unit 4
    Accumulated
    Depreciation Depreciation Carrying Amount
    Acquisition
    Cost 600000
    1st Year 34000 4 136000 136000 464000
    2nd Year 32000 4 128000 264000 336000
    3rd Year 25000 4 100000 364000 236000
    4th Year 29000 4 116000 480000 120000
    5th Year 30000 4 120000 600000 0

    PROBLEM 27 - 2 (IAA)
    a. Straight Line Method
    Cost 570000
    Residual Value 20000
    Depreciable Amount 550000
    Useful Life 10
    Annual Depreciation 55000

    Accumulated
    Depreciation Depreciation Carrying Amount
    Acquisition Cost 570000
    1st Year 27500 27500 542500
    2nd Year 55000 82500 487500
    Computation:
    55000 6 12 27500

    b. Working
    Hours
    Method
    Depreciabl
    e Amount 550000

    Useful Life in Terms of Service Hours 50000


    Rate per Hour 11

    Accumulated
    Depreciation Depreciation Carrying Amount
    Acquisition Cost 550000
    1st Year 3000 11 33000 33000 517000
    2nd Year 5000 11 55000 88000 462000

    c. Output Method

    Depreciable Amount 550000


    Useful Life in Terms of Units of Output 200000
    Rate per Unit 2.75
    Accumulated
    Depreciation Depreciation Carrying Amount
    Acquisition
    Cost 550000
    1st Year 18000 2.75 49500 49500 500500
    2nd Year 22000 2.75 60500 110000 440000

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