PR 10 2B Calculations Straight Line Method Per Year Units Of

PR 10 2bcalculationsstraight Line Method Per Yearunits Of Produ

Pr 10 2bcalculationsstraight Line Method Per Yearunits Of Produ

PR 10-2B Calculations: Straight-line method: ( - ) à· = per year Units-of-production method: ( - ) à· = per hour 2008 @ = 2009 @ = 2010 @ = Declining-balance method: 2008 x = 2009 ( - ) x = 2010 ( - ) - = Depreciation Expense Units-of- Declining- Straight-Line Production Balance Year Method Method Method Total PR 10-5B Date Description PR 11-2B 1. a. & b. 2. a. & b. Top of Form 2: On June 8, Acme Co. issued an 80,000 dollars, 6percent, 120-day note payable to Still Co. What is the maturity value of the note? a. 80,100 dollars b. 84,800 dollars c. 81,600 dollars d. 81,200 dollars 3: An employee receives an hourly rate of 25 dollars, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46 federal income tax withheld, 350 dollars; cumulative earnings for year prior to current week, 99,700 dollars; social security tax rate, 6.0percent on maximum of 100,000 dollars; and Medicare tax rate, 1.5percent on all earnings. What is the net amount to be paid the employee? a. 875.00 dollars b. 838.62 dollars c. 857.00 dollars d. 1133.14 dollars 4: From problem 10-2B, the total amount of depreciation expense by (a) the straight-line method is: a. 63,000 dollars b. 64,000 dollars c. 65,000 dollars d. 66,000 dollars 5: From problem 10-2B, the total amount of 2009 depreciation expense by (a) the straight-line method is: a. 20,000 dollars b. 19,800 dollars c. 21,000 dollars d. 32,000 dollars 6: From problem 10-2B, the total amount of 2009 depreciation expense by (b) the Units-of-Production method is: a. 22,670 dollars b. 22,680 dollars c. 22,690 dollars d. 22,700 dollars 7: From problem 10-2B, the total amount of 2010 depreciation expense by (c) the Double-Declining method is: a. 1,050 dollars b. 2,000 dollars c. 2,050 dollars d. 3,000 dollars 8: From PR 10-5B, the correct journal entry for Jan. 2 is: a. (Debit) Cash 69,000 dollars (Credit) Delivery Equipment 69,000 dollars b. (Debit) Delivery Equipment 69,000 dollars (Credit) Cash 69,000 dollars c. (Debit) Depreciation Expense-Delivery Equipment 69,000 dollars (Credit) Cash 69,000 dollars 9: From PR 10-5B, the correct journal entry for October 24 is: a. (Debit) Truck Repair Expense 415 dollars (Credit) Cash 415 dollars b. (Debit) Cash 415 dollars (Credit) Truck Repair Expense 415 dollars c. (Debit) Sales Revenue 415 dollars (Credit) Cash 415 dollars 10: From PR 11-2B, part 2b, the entry to record the Jan. 4 employer’s payroll taxes on the payroll to be paid Jan. 4 is: a. (Debit) Payroll Tax Expense 120,694 dollars (Credit) Social Security Tax Payable 58,840 dollars (Credit) Medicare Tax Payable 15,210 dollars (Credit) State Unemployment Tax Payable 38,532 dollars (Credit) Federal Unemployment Tax Payable 8,112 dollars b. (Debit) Payroll Tax Expense 112,694 dollars (Credit) Social Security Tax Payable 50,840 dollars (Credit) Medicare Tax Payable 15,210 dollars (Credit) State Unemployment Tax Payable 38,532 dollars (Credit) Federal Unemployment Tax Payable 8,112 dollars c. (Debit) Payroll Tax Expense 122,694 dollars (Credit) Social Security Tax Payable 60,840 dollars (Credit) Medicare Tax Payable 15,210 dollars (Credit) State Unemployment Tax Payable 38,532 dollars (Credit) Federal Unemployment Tax Payable 8,112 dollars

Paper For Above instruction

Depreciation accounting plays a vital role in reflecting the true value of assets and accurately matching expenses with revenues. Various methods are employed to calculate depreciation, each with unique applications and implications for financial reporting. Among these, the straight-line method, units-of-production method, and declining-balance method are prominent, providing options suited to different asset usage patterns and organizational needs. This paper explores these methods, their calculations, and real-world applications, highlighting their significance in effective asset management and financial accuracy.

Introduction

Depreciation signifies the allocation of the cost of tangible assets over their useful lives. It aims to match the expense of using an asset with the revenue generated from it, adhering to the matching principle in accounting. Accurately calculating depreciation is essential for providing reliable financial statements, tax compliance, and strategic asset management. Various methods exist, each suitable for different types of assets and business circumstances. This paper examines three primary depreciation methods—straight-line, units-of-production, and declining-balance—to understand their mechanisms, calculations, and practical implications.

Straight-Line Method

The straight-line method is the simplest and most widely used depreciation technique. It assumes that an asset loses its value equally over its useful life, leading to a consistent depreciation expense each year. The formula for straight-line depreciation is:

Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life

This method is ideal for assets that provide uniform utility over time, such as buildings or furniture.

For example, if an asset costs $66,000 with a salvage value of $6,000 and a useful life of 10 years, the annual depreciation expense would be:

($66,000 - $6,000) / 10 = $6,000 per year

This consistent expense simplifies budgeting and financial analysis.

Units-of-Production Method

The units-of-production method bases depreciation on actual usage rather than time. It is suitable for assets whose wear and tear depend on activity levels, such as machinery or vehicles. The formula is:

Depreciation Expense = (Cost of Asset - Salvage Value) / Total Estimated Units of Production per unit, multiplied by the number of units produced in the period.

This method ensures depreciation aligns with the asset’s actual utility, providing a more accurate reflection of asset consumption.

For instance, if a machine costs $100,000 with an estimated total production of 200,000 units, and it produces 20,000 units in a year, the depreciation expense would be:

($100,000 - $0) / 200,000 = $0.50 per unit; 20,000 units x $0.50 = $10,000

This method is especially advantageous for assets with variable usage patterns.

Declining-Balance Method

The declining-balance method accelerates depreciation, recognizing larger expenses in the early years of an asset’s life. The most common variant is the double-declining balance method. The formula is:

Book Value at Beginning of Year × (2 / Useful Life)

This method reflects the idea that assets tend to lose their value more rapidly initially.

For example, for an asset costing $66,000 with a 10-year useful life, the first year's depreciation would be:

$66,000 × (2 / 10) = $13,200

Subsequent years apply the same percentage to the declining book value. This approach is often used for assets that become obsolete quickly or for tax advantages due to higher early depreciation.

Application in Practice

Real-world application of these methods requires careful consideration of asset usage, industry standards, and tax regulations. For instance, in the case of a manufacturing machine, the units-of-production method provides a precise depreciation aligning with production output, ensuring expenses mirror consumption. Conversely, the straight-line method simplifies bookkeeping for assets like office furniture with consistent utility over time. Declining-balance accelerates depreciation for technology assets that lose value rapidly. The choice among these methods impacts financial statements, tax liabilities, and asset management strategies.

Conclusion

Understanding and applying appropriate depreciation methods are crucial for accurate financial reporting and effective asset management. The straight-line method offers simplicity and consistency, suitable for assets with uniform utility. The units-of-production method provides accuracy in usage-based depreciation scenarios, while the declining-balance method accelerates depreciation, capturing the rapid loss of value in early years. Businesses must evaluate their asset characteristics and strategic considerations to choose the most fitting depreciation approach, ensuring financial integrity and optimizing tax benefits. Proper application of these methods enhances transparency, compliance, and managerial decision-making.

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