University Car Wash built a deluxe car wash across the street from campus. The new machines cost $267,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 3,000 2 1,200 3 1,300 4 2,700 5 2,500 6 1,300 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)

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Business

Kelvin Mcclain

31 March, 22:55

University Car Wash built a deluxe car wash across the street from campus. The new machines cost $267,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours Used 1 3,000 2 1,200 3 1,300 4 2,700 5 2,500 6 1,300 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)

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Kyra Velez · Answer 1

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Straight Line Depreciation = (Cost - Residual Value) : Useful Life

= ($267,000 - $24,000) : 6

= $40,500

Year Opening book value Dep. Accumulated dep. Closing book value

1 $267,000 $40,500 $40,500 $226,500

2 $226,500 $40,500 $81,000 $186,000

3 $186,000 $40,500 $121,500 $145,500

4 $145,500 $40,500 $162,000 $105,000

5 $105,000 $40,500 $202,500 $64,500

6 $64,500 $40,500 $243,000 $24,000