Sushi Corp. purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $54,000. The equipment has an estimated residual value of $2,700. The equipment is expected to process 271,000 payments over its three-useful Life. Per yea expected payment transactions are 65,040, year 1, 149,050, year 2,56,910, year 3. Required:Complete a depreciation schedule for each of the alternative methods. 1. Straight line2. Units-of-production3. Double declining balance

Answer and Explanation:

The preparation of Straight line method, Units of production method and Double declining method is shown below:-

1. Straight line method

Income statement Balance Sheet

Year Depreciation Cost Accumulated Book value

expense depreciation

At acquisition $54,000

1 $17,100 $54,000 $17,100 $36,900

2 $17,100 $54,000 $34,200 $19,800

3 $17,100 $54,000 $51,300 $2,700

Working Note

Depreciation expenses

For 1 Year ($54,000 - $2,700) : 3

= $17,100

For 2 year ($54,000 - $2,700) : 3

= $17,100

For 3 year ($54,000 - $2,700) : 3

= $17,100

2. Units of production method

Income statement Balance Sheet

Year Depreciation Cost Accumulated Book value

expense depreciation

At acquisition $54,000

1 $12,312 $54,000 $12,312 $41,688

2 $28,215 $54,000 $40,527 $13,473

3 $10,773 $54,000 $51,300 $2,700

Working Note

For 1 year ($54,000 - $2,700) : 271,000 * $65,040 = $12,312

For 2 year ($54,000 - $2,700) : 271,000 * $149,050 = $28,215

For 3 year ($54,000 - $2,700) : 271,000 * $56,910 = $10,773

3. Double declining method

Income statement Balance Sheet

Year Depreciation Cost Accumulated Book value

expense depreciation

At acquisition $54,000

1 $36,000 $54,000 $36,000 $18,000

2 $12,000 $54,000 $48,000 $6,000

3 $3,300 $54,000 $51,300 $2,700

Working Note

For 1 year = $54,000 : 3 * 2 = $36,000

For 2 year = $18,000 : 3 * 2 = $12,000

For 3 year = 6,000 - 2,700 = $3,300

Therefore the preparation of depreciation schedule for each of the alternative methods is prepared above.